OCCASIONAL PAPER NO. 18 ISSN 0854-9818 Dec. 1998

Tree Planting in Indonesia: Trends, Impacts and Directions

Lesley Potter and Justin Lee

CENTER FOR INTERNATIONAL FORESTRY RESEARCH Office address: Jalan CIFOR, Situ Gede, Sindangbarang, Bogor 16680, Indonesia Mailing address: P.O. Box 6596 JKPWB, Jakarta 10065, Indonesia Tel.: +62 (251) 622622; Fax: +62 (251) 622100 E-mail: [email protected] Website: http://www.cgiar.org/cifor Contents

List of Maps and Photographs ii

Abbreviations and Glossary iii

Acknowledgements v

Foreword vii

Executive Summary ix

Chapter 1: Background and Tree Planting Trends 1 Tree Planting Trends in Indonesia 2 Structure of the Report 7

Chapter 2: From Shorea to CPO: Shifting the Imbalance in West Kalimantan 9 Timber, Land Classification and Population Change 9 Dayak Agriculture - Dispossession and Reaction 10 Tree Planting Activities Based around Existing Dayak Agriculture 11 Tree Planting Activities that will Displace Dayak Agriculture 14 Summary 29

Chapter 3: Jambi Comparisons: Remaking the Land Use Map in a Small Sumatran Province 31 Region, Population Change and the Smallholder Economy 31 The Timber Industry, Forest and Land Classification 33 The Timber Industry and Indigeneous Dispossession 35 Tree Planting Schemes Based upon Existing Smallholder Agriculture 36 Tree Planting Schemes which Displace Smallholder Agriculture 38 Summary 45

Chapter 4: Tree Planting in Southeast Sulawesi: Similar Trends on a Smaller Scale 47 Southest Sulawesi: Population and Economy 47 Forest Conversion and Intensified Agriculture: Estate Crops Versus Industrial Forests 48 The HTI, Provincial Interests and the Teak Forests of Muna 51 Summary 56

Chapter 5: General Conclusions 59

Bibliography 63

List of People Met 69

Appendix A: Data on Indonesia's Oil Palm Sub-Sector 71

Appendix B: Data on Applications for Forest Conversion, 1995 77 ii

List of Maps

2.1 West Kalimantan locations 9 2.2 Location and area of HTI concessions and of oil palm and rubber concessions in Sanggau and Sintang 15 2.3 Sanggau and Sintang change in forest land use classifications, 1987-1996 22 3.1 Jambi locations 31 3.2 Batang Hari regency vegetation, 1986 32 3.3 Jambi provincial land use plan 1996, in Batang Hari regency 33 3.4 Partnership estates in Batang Hari regency 43 3.5 Fires in Jambi on October 19th, 1997 44 4.1 Southeast Sulawesi locations 48

List of Photographs

1 . PT Finnantara Intiga’s Acacia mangium plantation in Sintang, West Kalimantan. The plantation is established around copses of trees valued by smallholders 17 2. Closely spaced rubberwood plantation, owned by PT Lahan Cakrawala, Sintang, West Kalimantan 17 3. Acacia mangium eaten by grubs on PT Finnantara Intiga plantation, Sintang 18 4. On PTP oil palm estates throughout Indonesia ageing trees are becoming difficult to harvest and declining in productivity 25 5. Villagers returning home after harvesting oil palm from their plasma estate, Sanggau, West Kalimantan 27 6. Oil palm fruit ready for collection, Sanggau 28 7. Jungle rubber garden in Rantau Pandan, Jambi, the location of ICRAF studies 36 8. A middleman tests the quality of latex he intends to buy from a smallholder 37 9. Cinnamon trees stripped of their bark, Kerinci, Jambi 38 10. Newly planted oil palm estate on converted forest land, Bungo Tebo, Jambi 40 11. Peatlands cleared by fire and planted with oil palm, Batang Hari, Jambi 42 12. Fertiliser ready for use at Batang Hari. Oil palm estates on peatlands need more fertiliser than those established on other soils 42 13. The natural forest has been cleared for teak and tumpangsari on this HTI swakelola site in northern Muna 49 14. Timber cut by a village company from a site intended for HTI swakelola, south Kendari, Southeast Sulawesi 50 15. A warning unheeded, Jambi. 50 16. Teak forest, Napabalano district, northern Muna, Southeast Sulawesi 52 17. Protected in a conservation reserve this is one of the largest teak trees remaining on Muna, Napabalano district 54 18. Shrouded by smoke, the sandy bed of the Kapuas river at Sanggau was exposed during the environmental disaster of 1997. Although caused by drought this time, could forest conversion make this an increasingly regular phenomenon in the future? 60 Abbreviations and Glossary

BPN Badan Pertanahan Nasional, lands titles office BUMN Badan Usaha Milik Negara, state-owned business enterprise CIFOR Center for International Forestry Research CIRAD Centre de Cooperation Internationale en Recherche Agronomique pour le Developpement, Centre for Cooperative International Agronomic Research for Development CPO Crude palm oil DISBUN Dinas Perkebunan, Estate Crops Service of the Agriculture Department FELDA Federal Land Development Authority of Malaysia GAPKINDO Gabungan Perusahaan Karet Indonesia, Indonesian Rubber Association GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH HBD HPH Bina Desa program, programme to improve relations between logging companies and villagers living within a forestry concession HPH Hak Pengusahaan Hutan, logging concession HTI Hutan Tanaman Industri, industrial timber or pulp plantation HTI Swakelola Self-management HTI, run by the provincial forestry service in Southeast Sulawesi HTI trans Industrial timber or pulp plantations including transmigrants Hutan Kemasyarakataan Forestry Department Social Forestry Scheme Hutan rakyat Community forest or smallholder commercial forest ICRAF International Centre for Research in Agroforestry IDT Inpres Desa Tertinggal, poor villages assisted with loans from the Presidential Fund Inhutani State Forest Company, now divided into six separate companies, Inhutani I through VI IPK Izin Pemanfaatan Kayu, permission from the Forestry Service to cut and sell wood from production forest site Kanwil Kehutanan Regional Forestry Office Kemitraan (or) Partnership arrangement (for management of oil palm Pola Kemitraan estates) KKPA Koperasi Kredit Primer Anggota, Prime Cooperative Credit for Members Kredit Usaha Tani Cooperative credit scheme between the Agriculture and Forestry Departments for tree planting KUK-DAS Kredit Usaha Konservasi Daerah Aliran Sungai, Smallholders’ Water Catchment Conservation Credit Scheme NGO Non-governmental organisation NTFPs Non-timber forest products ODA Overseas Development Agency (UK) Ojek Motor cycle and driver for hire palawija Dryland food crops other than rice, such as corn Perhutanda Forest company run by the regional government of Southeast Sulawesi Perum Perhutani State Forestry Company PIR Perkebunan Inti Rakyat, Nucleus Estate and Smallholder Scheme (NES) PIR trans PIR transmigrasi, Nucleus Estate and Smallholder Scheme incorporating transmigrants and local people PJPII Pembangunan Jangka Panjang II, second long-term development plan Plasma The smallholder section of a PIR or nucleus estate; sometimes used to refer to the people participating who are working their small blocks under the guidance of the larger company Pohon kehidupan ‘Harvestable forest’ a combination of fruit and other useful trees with cinnamon in the buffer zone of Kerinci Seblat National Park. The trees may be harvested, but not cut. iv

PRPTE Peremajaan Rehabilitasi dan Perluasan Tanaman Ekspor, Rehabilitation and Expansion of Export Crops Program PTP Perseroan Terbatas Perkebunan, Estate company proprietary limited. While referring to all estate companies, ‘PTP’ is commonly used to refer to state-owned companies. RAS Rubber Agroforestry System Reboisasi Reforestation program of the Forestry service encouraging smallholders to plant trees on the forest estate Repelita Rencana Pembangunan Lima Tahun, Five Year Development Plan RTRWP Rencana Umum Tata Ruang Wilayah Propinsi, provincial land use plan SFC State Forestry Company SFDP Social Forestry Development Project SRAP Smallholder rubber agroforestry program SRDP Smallholder rubber development project TCSSP Tree crop smallholder support project TGHK Tata Guna Hutan Kesepakatan, forest land use classification TSM Trans Swakarsa Mandiri, special projects allocating land to second generation migrants Tumpangsari Javanese word initially relating to the intercropping of teak with food crops; now used across Indonesia to refer to intercropping of young plantations UPM Usaha Petani Menetap, permanent farming systems programme UPSA Usaha Pelestari Sumber Daya Alam, tree crop programme for environmental conservation WWF World Wide Fund for Nature Acknowledgements

This report was prepared for a consultancy for the Center for International Forestry Research (CIFOR) using funds provided by USAID. We are grateful for the generosity and hospitality of all those people met who shared with us their experiences and gave assistance. We would especially like to thank the following people: the professional and administrative staff of CIFOR in Bogor; Guy Patterson (McGill University); Rudijanto Utama (Yayasan Dian Tama); Fernando Potess (ISDP project Berbak National Park); Pak Idris Sardi (Yayasan Gita Buana); Pak Asrizal Malano and students of the Pusat Studi Lingkungan at Universitas Jambi and the staff and students of the Agriculture Faculty and Pusat Studi Lingkungan at Universitas Haluoleo in Kendari. At the University of Adelaide we are grateful for the help of Sue Murray, Chris Crothers and Tom Mann. Despite the considerable assistance we have received we emphasise that any errors of fact are the responsibility of the authors alone.

The Authors

Dr Lesley Potter is Associate Professor in the Department of Geographical and Environmental Studies, University of Adelaide, South Australia 5005, Australia. E-mail: . When this study was carried out Dr Justin Lee was ARC Research Officer in the same department. His affiliation is now (as of January 1999), Department of Foreign Affairs and Trade, Canberra, ACT. Foreword

The Center for International Forestry Research (CIFOR) of Forestry has set up a team reformasi and a forum commissioned the study on “Tree Planting in Indonesia: reformasi, the latter of which suggests that forestry Trends Impacts and Directions” in June 1997. At that concessions be managed by cooperatives in a way that time, the first indications of an accelerated expansion logging benefits can accrue to local people. Ironically, of oil palm plantations in Sumatra and Kalimantan were development of agricultural export production is seen emerging. The paper and pulp industry was also rapidly as one important solution to the crisis facing the expanding its factory capacity, but the growth of Indonesian economy. This will provide a strong industrial timber plantations to supply the raw material incentive for government officials to continue to allow to feed these factories was far behind schedule. The the expansion of the oil palm industry. Because of high Ministry of Forestry was supporting several programmes international demand for crude palm oil (CPO) and low in which local people play a larger role in industrial tree production costs in Indonesia, oil palm is currently the plantations or benefit from state forests, while national most important of a limited range of commodities able NGOs and international centres like CIFOR and ICRAF to contribute to economic recovery. were conducting experiments with smallholder tree production. It seemed an appropriate time to clarify the One of the conclusions of this study, however, is that situation in the field and the interaction between tree even a reformed Ministry of Forestry will not be planting and tree management programmes, possibly in sufficient to control tree planting trends. It is the regional competition with each other. government officials who play the significant role in what happens in practice. The message from this report During the study and reporting period, Indonesia needs to be brought to the attention of those regional changed at a pace that has happened only two other times governments because, as the study also notes, local in the nation’s brief history. In August/September 1997, groups are becoming more vocal and militant in international attention was focussed on extensive forest defending their rights and opposing government fires, which were the result of people taking advantage programmes that do not adequately address their needs. of the ENSO-induced dry season to cheaply clear land It is hoped that this report will contribute to the on a large scale. Soon after, the country entered an realisation of the economic opportunities that tree economic decline which, by the end of 1997, had struck planting programmes in Indonesia do offer for those who with full force. These two crises, at least partly attributed are directly affected, and to help in the revival the to misuse of government authority, led to political Indonesian economy. upheaval in the early months of 1998, and the resignation of President Suharto. While this Indonesian drama was We would like to thank Judith Mayer, Assistant unfolding, the importance and potential usefulness of Professor at the Department of Urban affairs and this report changed accordingly. Planning,Virginia Polytechnic Institute and State University, and Harold Brookfield Visiting Fellow, In her review of this report, Judith Mayer comments: Department of Anthropology, Research School of “[It] clearly explains how without significant re-thinking Pacific and Asia Studies, Australia National University, and reform, governance and economic forces will for reviewing the manuscript and providing insightful inevitably lock rural communities and regional comments, and Yvonne Byron who edited the manuscript. economies ever more tightly into dangerous cycles of The funding for this endeavour was provided by USAID dependence on a limited range of commodities and under grant DAN 411-G-00-1063-00. livelihood options, and will increase the vulnerability of rural communities and regional resource bases to predictable threats of pests/disease, wildfire and other - Wil de Jong natural- disasters.” In this era of reformasi there should Senior Scientist be political opportunity for such reform. The Ministry CIFOR Executive Summary

This report details the results of a consultancy carried have nowhere to operate. At best they will exist on the out by the authors for CIFOR from September 1997 periphery in isolated locations’ (Chap. 2, p20). through February 1998. The aims of the project were as a follows: Much more important are the activities that will displace 1) to identify tree planting activities currently prominent Dayak agriculture, of which two basic types are in Indonesia; identified: industrial timber and pulp plantations (HTI) 2) to seek reasons for their ascendancy, with specific and oil palm estates. The ‘classical approach’ taken by reference to influential actors capable of favouring HTI companies is exemplified by the government certain activities and holding back others; of company, Inhutani III, which has basically failed in particular interest were the activities of regional negotiating its relationships with villagers, from whom government agencies which were hypothesised to be it needs to acquire land. Promises to provide facilities more instrumental than central government policy have been consistently broken and intimidation has per se in determining what actually took place on occurred at times. By contrast other HTI companies, the ground; such as the Finnish-Indonesian consortium Finnantara 3) to monitor the perceptions of local and transmigrant Intiga, have adopted a much more conciliatory attitude, populations regarding the opportunities and providing villagers with many benefits and not constraints associated with particular tree planting attempting to coerce them. Unfortunately, such an options; and operation is perceived as too expensive by regional 4) to briefly examine the environmental impacts of authorities, and even Finnantara’s partners have failed dominant tree planting activities. to support it. Oil palm companies are passing over the consortium in the struggle for land. The tree planting activities identified for detailed discussion were: ‘improved’ smallholder tree crop The second half of the chapter is devoted to an analysis production (under both government and NGO projects of the oil palm industry, which is expanding rapidly in and as farmer initiatives); industrial timber and pulp West Kalimantan. The regional government is crucially plantations; and oil palm estates. Chapter 1 provides a supporting the oil palm estates as they are seen as the general discussion of trends in these activities, under best option to quickly generate both local income and the headings ‘sources of support’, ‘current regional economic growth. Oil palm companies are thus implementation’ and ‘limitations to establishment’. being permitted to clear logged-over concessions that Chapters 2, 3 and 4 present case studies of the three should theoretically be classified as plantation forest or provinces selected for detailed analysis: West HTI. They are replacing smallholder rubber by Kalimantan; Jambi and Southeast Sulawesi. In each of persuading farmers to give up land in return for a small the case study areas a specific range of activities is allotment of oil palm, which is planted according to examined to provide both comparison and contrast, company specifications and processed in the company while Chapter 5 outlines some general conclusions. mill. The various types of oil palm estates are described Further statistics on oil palm are provided in Appendix and their impact on local communities is examined in A. depth. The older government estates (PTPs) were more generous in their treatment of smallholders (allowing The chapter on West Kalimantan provides an in-depth them 2.5 ha of land already planted to oil palm, a house analysis of the competition for land among oil palm and garden, while the company took an equivalent estates, industrial forest plantations and smallholders in amount of land). They have been largely superseded two regencies (Sanggau and Sintang). It begins with a by Perkebunan Inti Rakyat (PIR) schemes operated by discussion of the logging industry and its impact on private companies. When resuming 7.5 ha of land from indigenous Dayak communities, then identifies tree villager households, the company keeps 2.5 ha for its planting initiatives aimed at improving Dayak nucleus estate, the villager receives 2.5 ha and 2.5 ha is agriculture. These are subdivided into schemes operated made available to transmigrant settlers. Although credit by NGO and international organisations and government is available, this must be repaid and the companies insist schemes. The former include ICRAF’s rubber on heavy fertiliser application, which adds to the agroforestry system, the charcoal project of CIFOR with villagers’ outlays. Although theoretically the oil palm Yayasan Dian Tama, and the GTZ/Ministry of Forestry plots will give good returns to their owners, yields on Social Forestry Development Project. The general the older estates are showing premature decline and conclusion is that such tree planting activities, whether incomes are not as high as anticipated. The newest oil government or non-government have had a limited palm schemes are operated by self-funding companies impact over quite small areas. ‘The problem facing these who, it is feared, will have less reason to be as socially schemes is that by the time they are perfected they may concerned as their predecessors, hence their impact on x local people will be less acceptable. Foreign capital weaken the power of the regional administration and its (especially from Malaysia) is also being encouraged into control over the land, it retains this control on the ‘eastern Indonesia’, which includes Kalimantan. mainland. The potentially high value of teak also offers Although all new estates are supposed to have unusual temptations that have threatened the total ‘partnership’ agreements with local people, this is a vague collapse of the industry. While smallholder tree planting concept and the form of such arrangements is as yet of cocoa and cashew to a certain extent replaces rubber largely unknown. in these eastern districts, they will eventually face competition from oil palm. How well the oil palm will The Jambi chapter takes a broader sweep through that grow in areas with a much longer dry season is still to be small province selecting similar activities for purposes ascertained. of comparison with the situation already described in West Kalimantan. Again there are three basic emphases: The major findings are summarised in the concluding smallholder activities (especially in a province with a chapter, which considers the impact of the monetary long tradition of smallholder rubber); HTIs and their crisis and updates the general information to mid-August attempts to acquire land for tree planting after the decline 1998. Oil palm is seen to emerge as the winner on all of the logging industry; and oil palm, the biggest land counts, just as the IMF has endorsed further development consumer. Achieving good relations with farmers is of tree-based cash crops. Forestry is in retreat, a retreat especially important for the largest HTI, Wirakarya Sakti symbolised by the naming of the new Minister, the (WKS), because of the need to supply its large pulp mill Minister of Forestry and Estate Crops. Fires have further with raw materials. It has thus engaged in private farm undermined some of the best Kalimantan forests, which forestry (Hutan rakyat), with mixed success thus far. now face increased pressures from the demands of the Experiments with oil palm include planting it out on peat, large firms operating logging concessions, plantation which adds greatly to the expense and to the risk of fire forests and oil palm estates. Newly impoverished but is perceived as being necessary to counter future populations are also turning in increased numbers to the shortages of mineral soil. An interesting social extraction of forest resources. Indonesia is the world’s experiment is the Kemitraan koperasi, or cooperative cheapest producer of palm oil products, largely because partnership scheme being undertaken in the Batang Hari of low labour costs. Future plantations are likely to want regency. In that regency the oil palm estates are to cut costs even further, especially those estate perceived as the ideal solution to problems of poverty companies being attracted from Malaysia. Huge markets among the Jambi Malay, the indigenous Kubu minority for palm oil products, both local and international, will and resettled populations from the Kerinci Seblat ensure the industry’s future growth. Substituting much National Park. of the remaining tracts of Indonesia’s biodiverse tropical forest and even the mixed cultivations of smallholders Most conclusions from the Jambi chapter are similar to by oil palm monocultures, is not an environmentally those from West Kalimantan, especially in their happy prospect, but it is a prospect faced with identification of the systematic dispossession of local equanimity, even eagerness by local administrations. people from their land, which was initiated by the original While the pulpwood monocultures will also engage in forest classification and has been continued through the the battle for land, the demise of many is likely, except establishment of exotic monocultures on the converted in specific areas where they can attract smallholder forest estate. The favouring of oil palm over all other growers. Big questions of continuity and sustainability land uses by provincial authorities is seen as creating a of all these tree crops do remain, however, together with dangerous imbalance in the development process. uncertainty surrounding the continued role of the smallholder as independent grower and producer of a Southeast Sulawesi, being much further to the east, has variety of tree crops. so far little oil palm (although it is coming). The discussion here revolves largely around the future of Developments since the fall of the Suharto HTIs, especially the unique situation of the declining administration, while encouraging more open discussion teak industry on Muna Island, estimated to be around on government policy, and more activity on the part of 300 years old. In eastern Indonesia, HTIs usually involve local NGOs, so far do not indicate major changes in slower growing and potentially more valuable timber, direction. Increased political freedom is coupled with such as teak and mahogany, rather than pulpwoods. After economic stringency, which does not encourage new attempts to overcome the problem of teak theft on dry initiatives. The behaviour of the private oil palm and otherwise income-scarce Muna by means of a companies is revealed (unsurprisingly) as profit-seeking provincial government instrumentality, the decision has above all with little concern for social issues, while local reluctantly been taken to devolve the management of people are showing increased readiness to fight to retain this important resource to a State Forestry Company, such their land. as Perum Perhutani. While this decision appears to CHAPTER 1 BACKGROUND AND TREE PLANTING TRENDS

Timber from Indonesia’s dipterocarp forests has been The assortment of interests involved in the planting and an important source of non-oil revenue for the past 30 promotion of trees, and the fluency of the economic and years. In the face of continued exploitation, however, policy environment, has made the position on the ground and despite government rhetoric concerning the both diverse and dynamic. It was against this sustainability of the supposed ‘selective logging’ background of political and economic uncertainty that operations of concession holders, there is an acceptance we were invited by CIFOR to compile this report. We that this resource could soon be exhausted. Indonesian therefore sought information from a variety of secondary policy makers have thus sought alternative, profitable sources and from fieldwork in three provinces (West uses for deforested and logged-over lands that can Kalimantan, Jambi and Southeast Sulawesi) between sustain their revenue-earning capacity. September 1997 and February 1998. Following our first draft report to CIFOR, we have subsequently sought to Planting trees on degraded or cleared forest lands and update our information to the middle of August 1998, on the private holdings of villagers living near remnant but we are aware that the situation continues to change forests has been identified by the government and its rapidly and we will undoubtedly be out of date with advisers as one means of achieving its conservation and some of our findings by the time of publication. development goals. Consistent with this broad principle, the Forestry Ministry1 ruled that all concessionaires must The aims of the report are as follows: replant at least part of their leases with fast-growing trees. 1. to identify which tree planting activities are currently An attempt was also made to stimulate the interest of prominent in Indonesia; private and quasi-government companies in timber and 2. to seek reasons for their ascendancy, with specific pulp plantations on other degraded forest lands, scrub reference to influential actors capable of favouring and grasslands. On cleared lands, or forest lands suited certain activities and holding back others: of to conversion, the Agriculture Ministry actively particular interest are the roles and influence of promoted the establishment of estate crops, primarily regional government agencies in determining what oil palm and rubber, again to both private and quasi- occurs on the ground, which at times appears to be government companies, sometimes with international at odds with central government policy; assistance. Both the Forestry and Agriculture Ministries 3. to monitor the perceptions of local and transmigrant have encouraged smallholders to plant economically populations regarding the opportunities and useful trees on their private holdings to strengthen their constraints associated with particular tree planting farming systems. In addition, the promotion of options; and smallholder agroforestry schemes by international donor 4. to briefly examine the environmental impacts of and research agencies has been accepted by the dominant tree planting activities. government. We commence with a general introduction to the major Companies and smallholders, however, embrace tree tree planting activities often suggested for development planting selectively according to their perceptions of how on lands designated as ‘production’ or ‘conversion’ this activity meshes with their own interests. They forest. We detail their sources of support, the nature undoubtedly seek to manage their trees in a manner that and extent of their implementation at the national level is to their greatest personal advantage, though at times and general limitations believed to hinder their further this may be suboptimal from the government’s spread. Attention then turns to the establishment and perspective. They may even engage in illegal tree impact of these activities in practice. The discussion planting, for example where their tree crops encroach focuses on industrial timber and pulp plantations (Hutan on areas designated protected forest or national park. Tanaman Industri, HTI), oil palm and smallholder While some tree planting activities have needed initial rubber. While mentioning other smallholder tree crops, or continued government or donor subsidy, others have such as cocoa, cinnamon and cashew, we do not dwell been adopted spontaneously and over large areas, as on these at length, nor do we discuss coconut, except in smallholders and private companies take advantage of passing. We use as case studies the situations in West rising commodity prices or the ability to secure rights Kalimantan and Jambi in the geographic west of to land by the planting of trees. Indonesia and Southeast Sulawesi in the east. 2 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

Tree Planting Trends in Indonesia Ministries of Forestry and Transmigration jointly introduced the HTI Trans scheme in 1992. The Industrial timber and pulp plantations Government and its SFCs would provide 40% of the investment while the remaining 60% would be Sources of support contributed by the private sector in a joint venture The creation of large-scale industrial timber and pulp (Sudradjat and Subagyo 1993: 176). At the end of 1994 plantations of fast-growing species on short rotations almost 39% of the area planted was in transmigration has been a policy goal of the forestry sector since the estates (BPS 1997b). beginning of the Fourth Five-Year Development Plan (Repelita IV) in 1984. This aim was reiterated for both Current implementation Repelita VI (1994-1999) and the second long-term Estimates of forest land area in Indonesia vary from 92.4 development plan (Tantra and Hutabarat 1996: 82). million ha in Repelita VI documentation to 120.6 million Species used have been predominantly Acacia mangium, ha according to the GOI/FAO National Forest Inventory but Pinus merkusii and Paraserianthes falcataria (Sunderlin and Resosudarmo 1996: 1). HTIs are given (known locally as sengon) have also been tried, together priority on limited and permanent production forest land, with Gmelina arborea and the slower-growing teak totalling 60 million ha or around one-half of the (Tectona grandis) and mahogany (Swietenia designated forest zone (Anwar 1993; BPS 1997b: 216). macrophylla) in the drier areas (BPS 1997b: 11). The plantations would replace ‘unproductive’ forest The establishment of HTIs has been slow. Ambitious vegetation (with a stocking of less than 16 cu m/ha), plans commencing in 1984 to plant 1.5 million ha every scrub or alang-alang (Imperata cylindrica) (Haeruman five years and establish 4.5 million ha of plantations by 1993).2 The policy was motivated by the anticipation the year 2000 have not approached fulfilment (Davis of a raw material deficit by the year 2000, due to 1989; GOI/FAO 1990; MoF 1991). By 1989 only 4.5% expanding domestic and export markets (GOI/FAO (67 500 ha) of the target had been reached (Anwar 1993: 1990; Anwar 1993: 161). The theory was that HTIs 170). Admittedly there has been more success recently, would turn degraded forest areas into a valuable particularly with pulp plantations of Acacia mangium. resource, supply and enhance the market for timber, pulp By late 1995, 520 000 ha had been established across and paper and reduce pressure on natural forests (Davis the nation (Sunderlin and Resosudarmo 1996: 13).3 A 1989; Anwar 1993). They were also hoped to promote Forestry Department spokesman claimed recently that an image of ‘sustainable forest management’ in response 320 000 ha had been planted in 1996/97 (70 000 ha to environmentalists’ demands for an international above the year’s target) and that an additional 311 000 boycott of tropical timber imports and a call for eco- ha was planned for 1998/99 (Media Indonesia 27/2/98, labelling (Mayer 1996a: 149). 2/3/98). If all of these trees survive, this may bring the total HTI area to just over one million ha by the year The government has offered companies willing to 2000. establish HTIs interest-free loans from the reforestation fund (dana reboisasi), created in 1980 from a Limitations to establishment reforestation tax levied on concessionaires (Haeruman It has been estimated that pulp and timber plantations 1993). These loans cover 32.5% of establishment costs will continue to be constrained by unstable and low and must be paid back in seven years. The government prices respectively (Sunderlin and Resosudarmo 1996: has also supported companies borrowing establishment 13). Private investors may also be deterred by a lack of capital from banks or other financial institutions and has processing facilities and the high cost of their allowed some to further minimise establishment costs construction. Even with fast-growing species such as by cooperating with a state forestry company (SFC) Acacia mangium, HTIs do not begin to produce a return (Hasanuddin 1996: 15). Other incentives include low for 5-8 years. Investors may prefer to select commodities land taxes and the right to clear cut and sell any remnant (such as oil palm) with a more rapid return, thus reducing vegetation on concessions (Haeruman 1993). interest payments on their establishment loans. Government incentives, particularly access to the Apart from these incentives the government moved to reforestation fund, are considered unreliable. Potential encourage HTI establishment by making it a condition companies have also found it difficult to obtain of logging approvals that concessionaires reforest adequately sized land parcels in accessible locations logged-over areas (Potter 1996: 377). To accelerate the (GOI/FAO 1990). Land limitations are related to establishment of plantations, while also providing resistance from local people that may not be alleviated employment opportunities for transmigrants, the without increased establishment costs. To overcome Lesley Potter and Justin Lee 3 problems with land, some HTI companies have begun the plantation area and bringing their fruit for crushing implementation of a community forestry (Hutan Rakyat) to the company factory.5 From 1986 to 1995 greater scheme. A group of farmers will pool at least 50 ha of private sector involvement was encouraged under the their land and grow the preferred tree crop for the PIR Trans programme. The government-funded company, with the latter providing all inputs and the infrastructure facilitated land acquisition, sponsored eventual profits being shared. These schemes are active smallholders (largely transmigrants), and provided credit in Jambi, and will be discussed in more detail in Chapter to investors at concessionary rates for estate 3. development, new crop planting and crushing facilities (Larson 1996). Established private estates run by four Oil palm estates of the large Indonesian cartels are still operating mainly under this system. Sources of support Agricultural development of the provinces outside Java In response to limitations on national revenues and the has consistently received special attention in the need to link credit more closely to market rates and Indonesian government’s five-year development plans. conditions, in August 1995 the government scrapped Emphasis has been on intensification through its previous schemes and decided to focus its efforts on transmigration, the original food crop schemes being promoting oil palm development in eastern Indonesia6 succeeded by plantations of estate crops producing both under the PIR Trans KKPA scheme; that is, the nucleus for export and the domestic market. While a number of estate and smallholder scheme (PIR) with transmigration different estate crops have been promoted, since 1990 involvement (Trans) based on Prime Cooperative Credit the oil palm (Elaeis guineensis) has attracted the most for Members (KKPA). The developer must create an attention. oil palm estate using the PIR model and provide capital while a cooperative of (local) smallholders contributes The oil palm was first introduced to Indonesia in 1848, land. Subsidised interest rates defray risks to investors when four seedlings were planted in the Botanic Garden associated with ‘plantations’ of groups of smallholders at Buitenzorg (Bogor). Progeny of these trees were (Larson 1996). The government has also redirected its transferred to Deli, North Sumatra in 1875, but it was own state enterprises toward the east. In 1996 plans not until 1911 that the first plantations were established. were announced for 14 state-owned plantation These were set up in Asahan, North Sumatra, and in companies to establish 89 000 ha of oil palm plantations nearby Aceh by a Belgian, the founder of the Franco- in Irian Jaya (Economist Intelligence Unit 1997a: 32). Belgian corporation SOCFIN, which still operates estates in the area (Hartley 1967: 15-17; Stoler 1985: 19)4 Dutch In western Indonesia government subsidy was no longer capital later became involved, with area and production offered or needed to attract private sector interest in oil expanding rapidly in the 1930s, so that in 1938 the palm plantations. Palm oil was in demand. It is the combined exports from North Sumatra and Aceh were primary cooking oil in Indonesia and has been the highest in the world (Thee 1977: 31; Stoler 1985: persistently in short supply over the past few years as 20). During the Dutch period, palm oil was produced consumption has grown with rising incomes (Economist only in large plantations: it was thus unlike rubber, which Intelligence Unit 1997a: 32). It now accounts for 12% developed a strong smallholder base early. of global vegetable oil consumption (Ahsanal Kasasiah 1996). Its price has been relatively stable and Following Independence and the restoration of the competitive and Indonesian production costs continue estates sector, after 1968 the Indonesian government to be the lowest in the world (Ahsanal Kasasiah 1996; (with World Bank assistance) boosted the oil palm Larson 1996: 7). Local Indonesian firms have been eager industry by making direct investments via state-run to set up entirely self-financed plantations, particularly companies, PTPs (Perseroan Terbatas Perkebunan) in Sumatra and West Kalimantan, while foreign (Larson 1996). The government’s intention was to companies have shown considerable interest in ensure adequate supplies of affordable cooking oil for participating. Such has recently been the influx of domestic consumers, promote industrial development foreign capital that, in March 1997, foreign companies and boost non-oil exports (Tomich and Mawardi 1995). were said to have been allocated 2.2 million ha out of a Smallholder involvement was initiated in 1979, perhaps total of 5.5 million earmarked for oil palm development following the example of Malaysia’s Federal Land (Suara Pembaruan 16/3/97). At that time a ban was Development (FELDA) programme. Plantations were announced on further foreign investment in oil palm in arranged around PIR/NES (Perkebunan Inti Rakyat or western Indonesia, meaning that Sumatra (but not Nucleus Estate and Smallholder) schemes, with Kalimantan) would be closed to all but Indonesian smallholders (known as plasma) cultivating 60-80% of capital. This decision was reversed in January 1998 in 4 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions response to Indonesia’s economic problems (Oil World especially as export prices of crude palm oil (CPO) 9/1/98) and the following month the industry was totally continued to climb. Output of CPO in Indonesia opened to foreign investors, who are now being actively increased ten-fold over the 20 years from 1975 to 1995, encouraged. Malaysian interests are the most prominent, from 0.4 million to 4.0 million tons. Predictions as they have difficulty finding adequate land for suggested a rise to 6.0 million tons in 19989 and a further expansion at home and labour is more expensive there. doubling by 2010 (Ahsanal Kasasiah 1996; Oil World To maintain smallholder involvement and protect the Annual 1997). There is certainly scope for increased rights of local landowners, the government has sales as markets expand, especially in other parts of Asia emphasised that privately run estates should be based such as China and India. Constraints on continued on a ‘partnership’ relationship with local people. The growth in oil palm area are mainly related to access to Minister of Agriculture, fearing that foreign plantations land and capital, although investments by foreign firms in particular may indulge in exploitative labour practices, could supply some of the latter. has stated that in the future companies may have to prove the existence of such partnerships before they are granted Larson (1996) suggested that disincentives could emerge permits (Suara Pembaruan 25/3/97). from market distortion caused by government intervention; the opposite effect was occurring in July Current implementation 1998. The government has for some years levied an A US Department of Agriculture report7 estimated that export tax on CPO producers to limit domestic prices the total area planted to oil palm in Indonesia amounted and ensure supplies of cooking oil to the local market. to 2.2 million ha of which about 50% had not reached For a few months after the crash of the rupiah in January full production (Economist Intelligence Unit 1997b: 30). 1998, exports of CPO were banned. The lifting of the One-third of the total oil palm area has been established ban saw the introduction of new export taxes of first in the last five years while the area of other estate crops, 40%, then 60% of the value of the product. However, such as rubber, has remained fairly static (BPS 1997a: such a disparity existed between local and export prices 211). Most recent figures suggest that Indonesian that these taxes proved barely a disincentive to exporters, investors control 2.4 million ha of oil palm, of which except insofar as they sought ways to avoid the tax and state-run companies possess 443 000 ha of older smuggle their product out of the country (Jakarta Post productive plantings, smallholders have 824 000 ha and 21/7/98, and see more extended discussion in Chapter private companies the rest, primarily new, immature 5). plantations (Jakarta Post 12/6/98 ). Four Indonesian cartels – Sinar Mas, Astra, Salim and Raja Garuda Mas It is possible that in the long term the export market – are responsible for 68% of the 1.2 million ha of oil could be threatened by a campaign against palm oil run palm plantation owned by private firms (Cohen and by the American Soybean Association (consumption Hiebert 1997; McBeth 1997). may increase cholesterol) or by the reintroduction of import duties on palm oil products entering key Oil palm development will continue to be focussed on European countries (ICBS 1997: 383). However, the the 40 million ha of land available for conversion to ample alternative markets that appear to exist, especially cash crop cultivation in Indonesia’s outer islands in Asia, would tend to minimise such effects. (Sunderlin and Resosudarmo 1996: 13). Government plans drawn up before the economic crash called for the Given the low costs of production, high export prices plantation area to reach 5.5 million ha by 2000 (Cohen and continuing world demand, the industry is predicted and Hiebert 1997: 28), and for Indonesia to be the to recover quickly and continue to expand. More critical world’s biggest palm oil producer by 2005 (McBeth is the question as to whether political change in the new 1997). Unlike the position with the HTI plantings, these Indonesia (perhaps after the elections in 1999) will alter targets could still be achievable. Vast areas of land are current policy favouring the spread of cash crops, already under licence for development and further especially oil palm. This question will be taken up at reservations targeting oil palm approach 5.5 million ha. the end of the report, following the analysis of the case However, the pace of production in Malaysia, the present studies in Chapters 2, 3 and 4. world leader, may accelerate in response to present high prices and increased demand.8 ‘Improved’ smallholder tree crop production: government and NGO projects Limitations to establishment The establishment of new oil palm plantations proceeded Sources of support apace during 1997. Interest of investors, including some Indonesian smallholders have traditionally grown stands of Indonesia’s wealthiest companies, remained high, of trees as part of diverse farming systems. The Lesley Potter and Justin Lee 5 government and international agencies have instituted variant known as UPSA (Usaha Pelestari Sumberdaya many schemes over time aimed at intensifying this Alam), and must construct terraces before planting their activity to improve living standards and reduce trees. Participants in both these schemes receive inputs dependence on shifting cultivation. There is no doubt for 0.5 ha, a hoe, planting materials and fertiliser. While that much smallholder tree planting has the advantage establishment of tree crops will give farmers rights to of preserving biodiversity while at the same time the land, only local rubber varieties are used, which take allowing human harvesting of the products. This is 15 years to become productive as against six years for especially true of traditional rubber forests and complex clone rubber, while production levels are only one-third agroforests specialising in fruit trees and other useful as high (FAO 1997). species (Michon et al. 1992; Dove 1993; Padoch and Peters 1993). Government agencies tend not to recognise In addition to its traditional reforestation activities, the the positive aspects of traditional systems, concentrating Directorate General for Reforestation and Land instead on monocultural estate models which have Rehabilitation recently instituted a variety of ‘social become all pervasive (de Jong 1997). forestry’ programmes. These also give smallholders ownership over trees planted and the right to sell The Indonesian Agriculture Ministry has been active for products harvested. The trees are established using credit many years in attempts to improve smallholder tree from the Forestry Ministry administered by a distributing planting. Initially, it provided extension, improved bank. The social forestry credit schemes include both planting materials and limited credit to individual the Smallholders’ Water Catchment Conservation Credit households, while at the same time establishing modern scheme (KUK-DAS, Kredit Usaha Konservasi Daerah marketing bodies. Due to the limited success and Aliran Sungai) and the Smallholders’ Forest Credit coverage of this approach it then focussed on large-scale scheme (Kredit Hutan Rakyat). Smallholders are offered schemes planting tree crops such as rubber in contiguous credit of up to 2 million rupiah per hectare, at 6% interest blocks, of which the PIR/NES schemes were just one per annum, to establish trees on their own land outside example. More recently, the Agriculture Ministry has the forest estate. They must work with a business partner encouraged smallholders to develop smaller blocks with who administers the loan and form a farmers’ group with concentrated extension from the estate crops directorate, their neighbours so that a total area of 900 hectares is under a scheme known as the Rehabilitation and planted (DJRRL 1996, 1997; MoF 1997). Expansion of Export Crops program (PRPTE, Peremajaan Rehabilitasi dan Perluasan Tanaman The Forestry Ministry has also initiated a social forestry Ekspor) (Barlow and Tomich 1991). This scheme offers scheme (Hutan kemasyarakatan) encouraging credit to smallholders prepared to organise themselves smallholders to plant trees on production forest land so into groups to develop their own plantations. Each that a buffer zone is created around protection forests. household normally contributes 2 ha of land on which Seventy per cent of the trees planted are for timber while they plant coconut or rubber (de Jong 1997: 191). the remainder are fruit trees which smallholders may harvest but not cut (Drs Budi Hardjo personal Since the first Five-Year Development Plan (1969-74), communication, Oct. 1997). National Park authorities, the former Forestry Ministry has encouraged for example in Kerinci Seblat National Park (TNKS) in smallholders to plant trees on the forest estate through Sumatra, have similar schemes to promote useful trees its reforestation programme (reboisasi) and on their (pohon kehidupan) among the inhabitants of the buffer private land through ‘regreening’ (penghijauan). These zone around the park perimeter. The Forestry Ministry programmes normally operate on a short-term basis with is also engaging in cooperative credit programmes with the Forestry Ministry providing funds and materials for Agriculture (Kredit Usaha Tani) to encourage farmers one season of planting and two to three seasons of to plant timber species with agricultural crops (Ir. Dadan maintenance. Smallholders merely provide the labour; personal communication, Sept. 1997). they obtain no rights to the trees planted under reforestation projects and limited rights under Promoting improved tree planting systems amongst regreening. smallholders has been the dominant modus operandi for many international development and research agencies A newer programme for ‘stabilisation of shifting across Indonesia. Soil and water conservation cultivation’ (Usaha Petani Menetap, UPM) aims to techniques involving fast growing tree legumes, such convert upland swidden fields and Imperata grasslands as Leucaena sp. and Calliandra sp., have been promoted to permanent crops, especially rubber and fruit trees. to stabilise and intensify upland agriculture in drier Farmers whose fields are steeply sloping come under a regions. There has also been detailed and extensive 6 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions research into traditional agroforestry systems and source of cash income. While expansion and adjustment projects aimed at their promotion and intensification. It of traditional systems has occurred due to direct is common for international agencies to cooperate with intervention as described above, it has more commonly local NGOs or industry groups (such as tree crop taken place through the initiative of smallholders processors, e.g., GAPKINDO, the Rubber Association themselves, in response to some change in their external of Indonesia) when promoting improved smallholder environment. Rubber smallholdings in particular, tree planting. though affected by variation in international commodity prices, allow farmers flexibility in applying labour, with Implementation more tapping when prices are higher and the resting of Indonesia’s independent smallholders produce a wide trees when a downturn occurs. During the recent cocoa variety of tree crops. Improved planting, characterised boom, rising prices stimulated farmers to extend their by an abundance of mostly small-scale projects, often traditional tree planting activities and introduce new concentrates on the intensification of existing tree species (Jamal and Pomp 1993). They also planted more gardens or is intended to be a stimulus to smallholders trees when confronted with competition for land from to expand their traditional activities spontaneously. either new land users or other smallholders (Mayer These characteristics make it difficult to calculate the 1996a: 83; Sunderlin and Resosudarmo 1996: 7). Jamal area of trees resulting from such intervention, but it is and Pomp (1993: 93) argue that smallholders’ access to likely to be relatively small. land and their communications with other farmers, informing them of changes in the value of tree crops, Reforestation and afforestation promoted by the Forestry have far more influence on their willingness to innovate Ministry have consistently planned to revegetate an and plant trees than credit or the existence of formal average of about 150 000 ha of land per annum in the land title. 1990s and considerably larger areas in the past (BPS 1997a: 217). In the last two years more than 90% of the In some areas where traditional rubber gardens are area planned for reforestation was realised (BPS 1997a: dominant, farmer entrepreneurs are setting up village 218), but trees planted under these programmes often nurseries of improved planting material, especially bud- do not survive more than one or two seasons. In the grafted and improved seedling rubber, which is then newer schemes such as UPM and UPSA, the rubber trees made available at greatly reduced cost to local consumers have not yet come into production. Weed control and who want to improve the quality of their trees. Such fire are serious problems in all such projects. Social planting stock is both handled by traders and sold in forestry activities are still recent and are not widespread. local town markets during the rubber planting season, October-January. Barlow studied several such nurseries Limitations to establishment in North Sumatra and Riau, noting that those in North Attempts to intensify smallholder tree planting have been Sumatra were almost all operated by Javanese limited by a shortage of funds and technical expertise descendants of plantation workers (1995: 7). In South (Barlow and Tomich 1991). Credit schemes have Kalimantan similar nurseries exist in Kabupaten Tapin, required considerable organisation and commitment of usually run by Javanese transmigrants who, with the help resources (especially land) on the part of smallholders, of traders, supply materials to markets as far afield as and hence have been difficult to access. Insistence by Samarinda. Prices for bud-grafted stock were a fraction the Division of Estate Crops (Dinas Perkebunan, of those available from the government’s Estate Crops Disbun) that they are interested only in blocks of 50 ha Division (Disbun).10 Government sources in Tapin were or more is often not appropriate for individual small not happy with these developments, citing lack of quality farmers (FAO 1997). Moreover, receiving credit has control, and sought to limit them by licensing one village not helped smallholders when extension services or to produce all improved bud-grafted and seedling rubber materials are simply not available in their communities. (FAO 1997). It seems unlikely that this initiative, once Failure of many improved tree planting activities has started, will lose momentum, as access to reasonably resulted in smallholders being unable to repay their credit priced high quality planting materials improves farmers’ advances (Barlow and Tomich 1991). options, while not reducing their freedom to decide if, when and how much they will replant. ‘Improved’ smallholder tree crop production: farmer initiatives Implementation In 1996 smallholders owned 3.6 million ha of coconut Sources of support trees, 2.9 million ha of rubber, 1.1 million ha of coffee, Tree crops are an essential component of diverse, 760 000 ha of oil palm and a little more than 410 000 ha smallholder farming systems, often being the primary of both cashew and cocoa trees (BPS 1997a: 212). They Lesley Potter and Justin Lee 7 produced from these trees almost all of Indonesia’s which have generally favoured oil palm. The coconut/copra output, 75% of the country’s natural relationships between both HTI plantations and oil palm rubber and 95% of the coffee (BPS 1997a: 213-14, estates and local people are also examined in some Sunderlin and Resosudarmo 1996: 7). Over the last five detail. This theme is also taken up in the Jambi chapter, years smallholders have expanded their stands of estate after identifying the similarities and differences between trees slowly yet steadily. The most rapid increases were the two provinces. Attitudes of both local and in oil palm (BPS 1997a: 212), primarily in connection transmigrant populations to HTIs and specific kinds of with new nucleus estates. When the multitude of planned oil palm development are examined through studies of oil palm projects come on stream, continued growth in particular estates, while some unique features of area may be expected. However, while many farmers indigenous tree planting schemes are also discussed. have eagerly moved into oil palm in the last two or three Southeast Sulawesi, though different again in physical years, some dissatisfaction has begun to appear, as it attributes and as yet having little oil palm, is found to has become clear that rapid fortunes are not being made, possess similar attitudes among regional administrators that the work is heavy and other social adjustments are favouring estate crops. This chapter is particularly a required. In some cases (where this is still possible) study of the vicissitudes of the teak industry on Muna farmers have returned to their traditional systems; in Island and its HTI. Finally, Chapter 5 seeks to other cases they have resolutely refused to join the summarise the major findings and updates the general schemes, they and their lands remaining an ‘enclave’ of discussion in the light of more recent tumultuous events, secondary forest amid the monoculture of the estate. at least as far as August 1998. These aspects will be discussed in more detail in the case studies that follow. Endnotes Limitations to establishment 1 In March 1998 the name of this Ministry was changed Smallholder readiness to plant trees or extend traditional to ‘Ministry of Forestry and Estate Crops, reflecting holdings is influenced by resource scarcity, absence of technical knowledge, market disincentives, policy the changed emphasis of the organisation. disincentives and sociocultural norms (including a 2 The amount of this tax varies according to type of smallholder belief that existing stands of trees meet their tree. It is set between US $12 and $16/cu m, paid in requirements and do not need further extension). In the rupiah (Jakarta Post 27/6/98). case of the ubiquitous ‘jungle rubber’, it has also been 3 pointed out that as well as keeping weeds under control, As often happens, there are some differences in the the rubber forest includes many other useful species. published figures. The Bureau of Statistics report Wood for cooking and house construction, fruit trees, devoted to HTIs gave just over 1 million ha as the area medicinal plants and rattans are some of the additional planted by the end of 1994 (BPS 1997b: 11). products harvested from these forests, along with the 4 SOCFIN manages its oil palm plantations in Indonesia rubber. Replacing the rubber trees with high-yielding under an Indonesian subsidiary company called PT varieties often implies a monoculture which may not SOCFIN Indonesia, also known as PT SOCFINDO meet these other needs (de Foresta 1992; deJong 1997). 5 There were a number of variants of the PIR schemes Structure of the Report during this period. PIR Berbantuan became PIR Swadana in 1980, which was then divided into PIR The general introduction to tree planting schemes Lokal and PIR Khusus. These schemes were all heavily outlined in this chapter will be followed by a more subsidised by concessionary credit and state budget detailed analysis in the provinces of West Kalimantan allocations (Arief and Nugroho 1995: 126; ICBS 1997: (Chapter 2), Jambi (Chapter 3) and Southeast Sulawesi 100). (Chapter 4). Each of these chapters will emphasise 6 This definition of eastern Indonesia includes the four different aspects of the three categories of schemes provinces of Kalimantan, consistent with the Indonesian identified here, notably tree and pulp plantations, oil government’s 1990 concept of Kawasan Timur palm estates and smallholder schemes. The West Indonesia (KTI). Kalimantan case study is the most detailed and sets out many of the major features of our argument, 7 The date of this report was not given, but it presumably concentrating especially on the struggles between refers to 1996. Estimates of productive area for 1997 competing interests over land and the instrumental vary between 1.44 and 1.50 million hectares (ICBS involvement of regional authorities in land use decisions, 1997: 154-5). 8 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

8 Appendix A includes a range of figures describing 10 A government-produced clone plant sold for Rp 1500, Indonesia’s oil palm boom in more detail, including whereas prices at village nurseries ranged from Rp 200 growth in area and production over time, the location of (without polybag) to Rp 750-1000 (with polybag). estates, typical establishment costs, the amount borrowed Barlow’s study, conducted in 1991, indicated less by oil palm companies, world prices and returns to difference in the Riau example, between the prices for producers and consumption trends. budded stumps in government and private nurseries.

9 However, improved seedlings were a much cheaper Figures released at the end of July 1998 suggest a figure option, and apparently mainly produced by the private of 5.1 million tonnes as a more likely total for the year nurseries. (Jakarta Post 24/7/98). CHAPTER 2 FROM SHOREA TO CPO: SHIFTING THE IMBALANCE IN WEST KALIMANTAN

This chapter describes how tree planting trends In 1995 West Kalimantan produced 1.4 million cu m of observable at the national level translate to the local round logs, mostly Meranti (Shorea spp.) and exported situation, in this case the province of West Kalimantan, one million cu m of plywood and other wood products with specific examples from two of its regencies, to a value of US$ 489 million (BPS Kalbar 1996: 319- Sanggau and Sintang (see Map 2.1). Observations 320; BPS 1997c: 11). This output is extremely valuable presented here derive from fieldwork conducted for this to the regional economy, constituting 70% of the

Map 2.1. West Kalimantan locations

È PUTUSSIBAU È MUARABEDUA NGABANG È SOSOKÈ SANGGAU PUSAT DAMAI È È È SINTANG KALIMANTAN TIMUR È PONTIANAK r Rive r ive È i R as NANGA PINOH Melaw Kapu

KALIMANTAN TENGAH N 04080Km

PROVINCIAL BOUNDARY KABUPATEN BOUNDARY

study in September and October 1997 and from material province’s total international export earnings. Timber accumulated during previous visits to the province by products have dominated the region’s exports by about the authors. this margin since the early 1980s (Siahaan and Daroesman 1989: 539). Timber, Land Classification and Population Change At present the timber industry continues to maintain, and even increase, its export earnings by pushing deeper West Kalimantan is one of Indonesia’s significant timber and deeper into the forested mountains that skirt the producers and much of the province is classified as forest province. In the wake of this exploitation, however, land (Table 2.1). From a total land area of 14 680 700 there is conflict, as competing groups lay claim to the lands that the loggers have exposed. They are engaged ha, the Ministry of Forestry estimates 9.2 million ha in what could be termed an arboreal ‘arms race’, seeking (63%) falls within the forest estate (BPS 1997a: 216). a tree planting technology that they hope can be Of this land, 5.8 million ha is classified as production marketed as the best option for resource replacement, forest. Forty-five private logging concessionaires have and hence secure rights over land. exploitation rights over these production forest resources, or over 40% of all land in the province (BPS Rapid population growth in West Kalimantan has 1997c: 1-3). compounded competition for land. The province has 3.6 10 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

Table 2.1. West Kalimantan land classification

Area according to % of total Area of forest % of total Land classification RTRWP Bappeda land area lands according to land area Kalbar1 (ha) Min. of Forestry2 (ha) 1. Protected Areas a. Protected areas Protection forest 1 721 700 11.7 2 047 000 13.9 Peat areas 199 500 1.4 Water infiltration areas 180 200 1.2 b. Nature reserves & 1 337 000 9.1 national parks Nature reserves 926 200 6.3 Marine park and other 29 300 0.2 waters Mangrove 175 500 1.2 Recreation park 564 400 3.8 Total 3 806 800 25.9 3 384 000 23.1 2. Cultivated areas a . Forest Limited production forest 2 754 400 18.8 2 989 000 20.4 Permanent production 2 039 700 13.9 1 323 000 9.0 forest Conversion production 535 700 3.6 1 509 000 10.3 forest (sub-total) (5 329 800) (5 821 000) (39.7) b. Non-forest Wetland 700 000 4.8 Mining lands 244 100 1.7 Other uses 1 899 900 12.9 Dryland 2 500 000 17.0 Tourism 50 000 0.3 Housing, industry, etc 150 000 1.0 (sub-total) (5 544 000) Total 10 873 900 74.1 Total West Kalimantan 14 680 700 100.0

Source: 1. Pemda Tk I Kalbar (1997); 2. BPS (1997a: 216). million people (1995 Intercensal population survey) by forestry legislation to facilitate logging and by the living at a density of 25 persons per square kilometre lack of secure tenure on most Dayak land. (BPS 1997a: 47). This is relatively low by Indonesian standards but high on West Kalimantan’s poor and Dayak Agriculture – Dispossession severely leached soils. Annual population growth and Reaction averaged 2.46% from 1971 to 1995 (BPS 1997a: 48). Historically, the indigenous Dayaks controlled the lands The Dayak agricultural system includes hill and often of the interior. Chinese migrants have made forays into swamp rice swiddens and the establishment of tree crop agriculture but they, like the Malays, have largely lived gardens, commonly tembawang1 and rubber gardens. in the coastal areas or along the major rivers. More Fresh durian fruit and durian products have recently recently significant numbers of free migrants and become competitive with rubber and provide a good transmigrants have arrived from all over Indonesia seasonal income where access is available to the including Sumatra, Java/Madura and Sulawesi. They Pontianak market. However, rubber has had a more have often moved into the interior to take part in estate- fundamental role throughout most of the present century, based agricultural intensification projects. These especially in more remote districts. Rubber does not developments are challenging the dominance of the compete with swidden rice production but complements Dayak agricultural system which has been weakened it by providing cash income when needed (Dove 1993: Lesley Potter and Justin Lee 11

142). Smallholder rubber has regularly provided about formal ownership is extinguished, especially on 25% of West Kalimantan’s export income, second only production or conservation forest areas. Giving land a to timber (Siahaan and Daroesman 1989: 538; BPS forest classification also invites various conservation, Kalbar 1996: 319-20). Most smallholders grow ‘jungle’ agricultural and plantation forestry developments. These (unimproved) rubber in low-yielding, extensively developments represent a final, physical dispossession, managed gardens which resemble secondary forest. completing a process started and made possible by the symbolic, legal dispossession initiated by the forest Dayak livelihood activities constitute the most extensive classification system. land use in West Kalimantan. Actively cultivated land is relatively limited but when tree gardens and fallowed Logging activity is crucial in the transfer of Dayak lands lands under natural regrowth are included, together with to other users. By harvesting timber, loggers reduce the lands used for hunting and collecting (grassland, quality of existing forest on a piece of land. This can woodland and forest), the area used is vast. Official land result in its reclassification from production to use statistics do not give an accurate indication of the conversion forest if the stock of timber is reduced and area utilised by Dayaks because they fail to differentiate not replaced. A request from the provincial government which groups (smallholders, transmigrants, companies) to the Minister of Forestry and Estates, if approved, will are involved in each land use. Dayaks constitute one- allow the land to be cleared for agriculture. third of the province’s population and a higher Alternatively, the threat of logging and then conversion percentage of the rural population. Other land users may result in the forest being classified as a protected often complain that they have difficulty accessing land area. While usually (but not always) preventing logging, in West Kalimantan because it is almost always claimed such a classification can also lock out traditional Dayak by local Dayak groups, even though it does not appear users. to be utilised or occupied. In response to this threat of dispossession, Dayaks have The expansive use of land in West Kalimantan by Dayak initiated strategies to fortify their claims to land. agriculture and the vast area granted to forestry activities Villagers have observed they have stronger claims where has resulted in much overlap between Dayak and official they grow trees bearing agricultural products (such as forest lands and concessions. Many Dayaks have had rubber or fruit). Trees can signify permanent land use their land placed within the forest estate and find and hence ownership, thereby preventing appropriation themselves living alongside (and sometimes by companies and other villagers (Dove 1993: 142; participating in) logging activities. The low intensity ICRAF 1994: 9). Failing this, trees at least serve as a of their livelihood system (which results in minimal long- basis for compensation should the land be cleared or term vegetation change and leaves few markers of converted to another use (Peluso no date: 8). While ownership) and the low density of their population has competition over land is not the only factor behind the made it difficult for them to resist such intrusions. expansion of smallholder tree crop gardens onto lands that would previously have been left fallow, there is most In remote regions this disturbance may be only likely a strong association (Sunderlin and Resosudarmo temporary. After areas are logged, although the 1996: 7). vegetation is degraded the local communities usually regain sole possession of the land to use as they wish. Tree Planting Activities Based around Logging activity can also benefit them by providing Existing Dayak Agriculture short-term employment, opening land for swiddens and giving them access to chainsaws for land clearing. Government support for ‘modernising’ Overall, however, the effect of logging activities and of smallholder tree planting being included in the forest estate is negative for Dayak While the government’s greatest efforts have gone into communities. Aside from immediate impacts, in the long estate development, agencies in West Kalimantan have run it serves to weaken Dayak land ownership and worked to intensify smallholder tree planting, consistent facilitate dispossession. with the programmes described in Chapter 1. The former estate crops division of the Agriculture Department (now Dayak communities rarely have formal titles from the with Forestry) initiated activities under the Smallholder Indonesian government for their agricultural lands. At Rubber Development Project (SRDP), the Rehabilitation best they have customary title which can stave off claims and Expansion of Export Crops Programme (Indonesian made by other villagers but does not prevent seizure by acronym, PRPTE) and the Tree Crop Smallholder the state. The inclusion of their lands in the forest estate Support Project (TCSSP). Such programmes have had further weakens this customary right to land. Dayaks some success but have not resulted in the widespread may be granted use rights, but any hope of receiving dissemination of improved rubber varieties amongst 12 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions smallholders, hence have done little to improve their lot SRAP organisers accept that jungle rubber gardens have (ICRAF 1994: 7; Blowfield 1995: 7). These schemes a number of advantages. The mixtures of crops grown have been mainly concerned with agricultural together with rubber provide a diverse income consistent intensification and in fact have been the pioneers of with smallholder labour capacity. The gardens are also conversion and extinguishment of the traditional Dayak environmentally benign; they protect soil fertility, agricultural system. They have not been intended to prevent erosion and have a relatively high level of fortify Dayak livelihood. biodiversity (Sivanadyan and Norhayati 1992; ICRAF 1994). The purpose of the SRAP is to leave the In practice, however, these activities have had limited traditional rubber gardens essentially as they are, but coverage and minimal impact in West Kalimantan. They increase their productivity by replacing jungle rubber have not been responsible for most of the smallholder trees with improved planting material. The improved tree planting that occurs and they have not helped the rubber garden they term a rubber agroforestry system vast majority of villagers increase yields. Social forestry (RAS). The key to the research effort is to identify a schemes from the Forestry Department, for example, variety of higher-yielding rubber that will grow in the have only been implemented in a small number of heavily shaded, highly competitive and minimally locations in areas of no more than 25 ha each (Dadan tended jungle garden. personal communication). Most smallholder tree planting has been spontaneous. The government has RAS research is occurring in both Kalimantan and had, at best, an indirect role in promoting this tree Sumatra (see Chapter 3). One of a number of pilot planting by adding to smallholders’ feelings of insecurity projects has been set up in the regencies of Sanggau over their tenure. Direct government support is dwarfed and Sintang in West Kalimantan (Budiman 1995: 159). by assistance given to companies and their large-scale Farm trials, established around 1995, are experimenting tree planting activities, which are disruptive and bring with management strategies for higher-yielding rubber considerable change to Dayak communities. The varieties, nursery techniques, rice intercropping and government appears to support smallholder tree planting cover crops (Penot 1997). These trials remain very small only in the margins, either in remote areas where other scale, with widespread adoption of the scheme most developments do not occur or on small plots in house likely quite some time away. It is dependent on the gardens where again they will not impinge on larger development of a sufficiently appealing RAS. schemes. The appeal and eventual spread of the RAS will depend Improving traditional tree planting: experiments on who it is intended to serve. Obviously the agencies by NGOs and other groups involved in its formation have their own interests in the Other interested parties are aware that the Dayak scheme. ICRAF is interested in improving agroforestry agricultural system will not survive land appropriation systems particularly for the purpose of achieving a and conversion merely by extending the area of balance between production and environmental traditional tree gardens. Motivated by sympathy for the Dayak plight, or by the potential contribution their conservation. GAPKINDO, an organisation system could make to environmental conservation and/ representing rubber processors and exporters, has an or raw materials supply, these parties have encouraged equally pressing need for the system to succeed. Rubber indigenous villagers to adopt improved tree planting in Indonesia is losing favour as an estate crop, systems increasingly seen as appropriate to smallholders only (Tan no date: 6). It is becoming more likely that ageing SRAP Rubber Agroforestry System rubber estates will be replanted with more productive Helping Dayak smallholders to improve their traditional alternative crops. GAPKINDO is concerned that rubber growing practices has been one method of smallholders produce rubber inefficiently, generating on increasing their incomes, thereby securing their average just 593 kg/ha annually, as compared to private economic welfare and political independence. estates and government estates that produce 1065 kg/ha Specifically targeting adoption by smallholders, the and 1311 kg/ha respectively (Budiman et al. 1994). Rubber Association of Indonesia (GAPKINDO), the They also produce low quality rubber, due to the International Centre for Research in Agroforestry prevailing marketing method, which increases (ICRAF), the Indonesian Rubber Research Institute and processing costs. For GAPKINDO, the RAS is part of the Centre for Cooperative International Agronomic a strategy that will prompt smallholders to produce a Research for Development (CIRAD) are cooperating on substantial, reliable supply of high quality rubber to a Smallholder Rubber Agroforestry Project (SRAP). The service their industries. purpose is to develop means for incorporating improved planting materials into smallholders’ traditional rubber For the RAS to be adopted widely it will have to win gardens. the support of government as well as smallholders Lesley Potter and Justin Lee 13 themselves. Government officers would most likely be In response Dian Tama has sought alternative sources indifferent. Judging by their emphasis on economic of supply. It identified a local tree Vitex pubescens growth they would tend to give preference to alternative (Leban) as having potential after initial tests on farmer land uses which are high-input and involve external plots around Pontianak. To conduct further tests Dian investors. The RAS is based on balancing increased Tama needed funds but these were not forthcoming from production with environmental benefits. This trade-off international donor agencies. CIFOR offered funding, reduces short-term economic returns, so may not have but at the same time applied its own conditions to the wide appeal. testing. In line with its research agenda, CIFOR asked that the trees be tested on degraded lands vegetated with Smallholder interest in the RAS will be difficult to court Imperata cylindrica. Dian Tama consequently sought as well. The existing system for growing rubber, appropriate locations in four regencies and commenced developed by smallholders themselves, best serves their on-farm trials with smallholders whose participation was interests at present. They want a flexible system that is heavily subsidised. Dian Tama organisers did not low risk, provides some cash income when needed, conduct trials on the lands of their suppliers of coconut secures land and is not too demanding of their limited shell because they were not interested in diversifying labour capacity. If the RAS does not appeal to officials, their crops. then it may not protect smallholders’ land from appropriation by large-scale government supported The development of this tree planting alternative will schemes, one of the main reasons for planting rubber benefit smallholders if it provides them with a valuable trees at present. On the other hand, there may be crop for use on Imperata lands. Of course the activity instances where smallholders’ traditional rubber gardens has been developed in response to the immediate needs are experiencing serious productivity decline, of the organisers which again may not correspond with threatening even the modest incomes that they currently those of smallholders. Indeed those smallholders earn. If such situations exist in West Kalimantan, then currently providing coconut shell to Dian Tama will smallholders may be eager to adopt the RAS.2 It is still presumably suffer from price declines and possibly lose in the experimental phase, being trialled on small plots this outlet altogether if Vitex is planted over wide areas. owned by farmers. When and if the scheme gets to a Nevertheless, at present the activity remains stage where it could be implemented on a broader scale experimental and, considering competition for ‘critical’ it may not be the first choice for either government lands by established entities with proven technologies, officials or smallholders. It is most likely that it will if the technology is not ready for adoption soon take hold in remote locations around the periphery of smallholders may have nowhere to plant Vitex. At best the province where farmers are dependent on rubber and it may become a diversification option for tree planting have few alternatives. businesses.

Yayasan Dian Tama/CIFOR – testing Vitex pubescens GTZ/Ministry of Forestry - Social Forestry Development A similar research activity aimed at attracting Project smallholders to a form of tree planting based on the The Social Forestry Development Project (SFDP), priorities of organisers is being conducted by a local organised for the German agricultural development non-government organisation, Yayasan Dian Tama, in agency, GTZ, together with the Indonesian Forestry cooperation with the Center for International Forestry Department, emphasises tree planting, forest Research (CIFOR). Dian Tama’s general approach has management and social organisation activities in a clear been to give smallholders information about marketing attempt to fortify traditional Dayak livelihoods and opportunities and capital. Its organisers have specialised, conserve the forest. Commencing in 1992, the SFDP however, in the running of a charcoal manufacturing operates on a site falling across eight adjoining villages, plant in Pontianak. In the past Dian Tama bought and containing a core area of about 40 000 ha in the far coconut shells from copra-producing farmers to make north of Sanggau regency. It includes 12 000 ha of forest charcoal briquettes called ‘cococha’. These were that was once granted to a logging company but never packaged in Jakarta and exported, mostly to Europe. felled. Continued success resulted in the business being offered more contracts than it could supply, including some from The primary aim of the SFDP is to prompt smallholders Japan. Organisers were constrained by a shortage of to manage their natural forest sustainably. They are raw material. Coconut producers did not provide assisted to manage and market non-timber forest sufficient quantity and they tended to withhold supply products (NTFPs), reforest areas cleared for agriculture to boost prices. Dian Tama was often forced to pay and afforest critical lands around the forest edges. The these high prices to meet contracted shipment dates. well-integrated project also promotes a number of 14 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions activities intended to lessen pressure on the forest. These The SFDP is presently extending its influence over a include improved rubber production and marketing, large area, particularly in comparison to schemes such better methods for food crop and livestock production, as the RAS which remain largely experimental and very and savings schemes intended to generate capital for small scale. There are various factors, however, working local business initiatives. The programme also has against the programme’s survival, expansion and infrastructure, education and primary health components replication. First, the sustainability of the approach is and emphasises social reform to incorporate greater threatened because permission for the community to log participation in decision making (SFDP 1997: 5). the forest is not likely to be forthcoming in the near SFDP’s own survey of participants conducted in 1996 future. Timber companies would be expected to use suggested that the project had benefited them their influence over forest policy to lobby against such considerably. Participants said they had experienced permission, perhaps fearing that it would create a improved economic conditions (although the survey precedent that could jeopardise their access to forest acknowledged this may have resulted from better rubber areas. Secondly, it will be difficult to expand existing prices rather than the project itself) and were glad for activities because surrounding lands have been granted associated improvements in roads and primary health to other users. Finally, the technologies developed by care. They also expressed satisfaction with the the project will be hard for individual smallholders to reforestation and savings and credit activities (GTZ/MoF replicate without some kind of external assistance. At 1996). Comparing their 1996 survey results with a present it is almost impossible for small-scale baseline survey conducted before the project community-based agroforestry schemes to obtain bank commenced, SFDP organisers asserted that the loans to finance such innovation. proportion of ‘rather poor’ people in the project area had declined from 76% to 46% (GTZ/MoF 1996). The improved tree planting activities described above are mostly recent initiatives that remain very small scale. Despite this success, however, there has been weakening They have had localised impacts and have experienced support for the SFDP from the government (apart from little diffusion beyond their areas of initial officials specifically assigned to the project from the implementation. Their continuation remains dependent provincial forestry department, who remain on the support of organisers. Technologies promoted enthusiastic). Project organisers have calculated that to stem from organisers’ priorities and their views of what manage the forest truly sustainably and generate is best for smallholders. The schemes have technical satisfactory incomes for villagers, they must be granted merit and the potential to improve the smallholder the right to harvest and sell timber from the forest, as economy and political autonomy. Smallholders well as NTFPs. A number of years ago organisers themselves, however, may fail to see the potential applied to the Forestry Minister for the right to log the benefits. Government support also remains equivocal. forest falling within the project area on a selective and The problem facing these schemes is that by the time sustainable basis. When this request was continually they are perfected they may have nowhere to operate. refused they requested permission to log a small 500 ha At best they will exist on the periphery in isolated plot only, for the sake of experimentation. While private locations. Other tree planting activities that completely logging companies have been granted access to 40% of displace traditional Dayak agriculture are already the province’s land area this community-based project experiencing rapid growth, primarily industrial timber has been refused its modest request. Organisers fear and pulp plantations and oil palm estates. The that without this permission the SFDP will be unable to emergence, impacts and tensions between these two deliver genuine development to smallholders. competing land uses will have most influence on the future landscape and social fabric of West Kalimantan. SFDP organisers are also concerned by the infringement into its project area by Inhutani III, the state forestry Tree Planting Activities that will Displace company responsible for setting up industrial timber Dayak Agriculture plantations. The regional government gave a verbal agreement to SFDP organisers that they could expand Industrial timber and pulp plantations their activities over a total area of 102 250 ha to Twenty-six private HTI companies exist in West incorporate entirely the lands of the eight villages they Kalimantan (BPS 1997b: 3). There are more than 5 were already working with. It now seems the million ha of production forest to which they may gain government has ignored this pledge and instead formally access, once it has been logged. The extensive granted the land to Inhutani III. This is another severe concessions granted to these companies in the regencies restriction on the development of the SFDP, which of Sanggau and Sintang are shown in Map 2.2. In indicates that its spread will not be facilitated despite its Sanggau regency, seven HTI companies had concessions success. over 288 065 ha of land or 16% of the regency’s total Lesley Potter and Justin Lee 15

Map 2.2. Location and area of HTI concessions and of oil palm and rubber concessions in Sanggau and Sintang

Source: From a map compiled by BPN West Kalimantan, using data from West Kalimantan's RTRWP and the Forestry Department's HTI Trans & HTI murni maps land area in 1996 (Pemda Tk II Sanggau 1996). The the north of the regency while Inhutani III has a 100 three major companies are PT Inhutani III, PT Finnantara 000 ha concession in the south, on both sides of the Intiga (a joint venture between Finland’s Enso-Gutzeit Melawi river. In south Sintang four other HTI Oy, Inhutani III and Gudang Garam) and PT Sinar companies control a total area of just 25 000 ha and all Kalbar Raya with concessions over 101 000 ha, 100 000 are engaged in HTI trans programmes (Sasrudin M ha and 72 315 ha respectively. Most of this land, Sattin personal communication). So far, HTI activities however, is not yet planted. Companies have often appear to have been less disruptive in Sintang than in proposed extensive tree planting targets but only realised Sanggau. This may be because of Sintang’s greater area modest areas. In 1995 HTI companies in Sanggau and lower population density (about 13 persons per planted just 22% of the area they planned and increased square kilometre as opposed to 26 in Sanggau, [BPS this to 48% in 1996 (Pemda Tk II Sanggau 1996). Sanggau 1996; BPS Sintang 1996]). The intrusion of Smaller companies have reported greater success in HTI activities is also more recent. meeting their targets. Inhutani III in particular has often set grand targets but failed badly to realise them (Pemda HTIs: the classical approach Tk II Sanggau 1996). The companies intend to plant As the figures above suggest, Inhutani III is the biggest primarily Acacia mangium, as well as other Acacia HTI operator in the two regencies. Its plantations in species, plus some Pinus, Paraserianthes and Sanggau were intended to fulfil much of the provincial Eucalyptus, together with improved rubber, for both Forestry Department’s long-term goals for timber wood and latex. plantation development in West Kalimantan (Mayer 1996a: 144). The area under Inhutani III’s control is HTI operations in Sintang regency are similar to those boosted by lands previously granted to logging in Sanggau. The same species are planted and concessionaires which revert to the government because companies often fail to meet their targets. There are the concessionaire fails to rehabilitate them adequately eight HTI companies in Sintang (Akcaya 4/10/97) with after logging. Inhutani III’s method of operation could Inhutani III and Finnantara Intiga again dominating be described as the classical HTI approach. The regional operations. Finnantara Intiga has about 100 000 ha in government grants a concession to the company which 16 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions theoretically excludes all other development activities. and extraction of timber from natural forest by HTI It must then consult and negotiate with local people companies was the subject of a crackdown in 1994 by living on that land before it commences operations. then Forestry Minister Djamaludin. Unfortunately since Company staff are accompanied by officials from local that time little is said to have changed. and regional government agencies when they conduct their discussions in villages. Villagers are promised that Monoculture tree plantations are also accused of creating the company will construct new roads, bridges, public various environmental problems. Low biodiversity, loss offices and religious facilities for their use when it of habitat, soil erosion, acidification and nutrient commences operations. They are also promised depletion, water table and water quality changes, employment opportunities (usually as unskilled labour modified ecology, agrochemical use and increased pest for land clearing and plantation maintenance) and they and disease attack are some of the detrimental are given a one-off payment by the company for the use environmental impacts feared (WALHI and YLBHI of their land (about 35 000-40 000 Rp/ha) (Bamba 1996: 1992: 32, Dudley et al. 1995: 13-14). WALHI and 21).3 YLBHI (1992: 33) warn that the very popular Acacia mangium is plagued as a seedling by 19 species of insect. The way this classical approach has worked in practice, HTI projects also isolate local people from forest areas however, has generated much controversy. Inhutani III and fail to provide the range of goods and services to has been criticised widely for the real nature of its which they formerly had access. consultations with local landowners. While technical problems are common, mishandling of relations with Problems experienced with HTI projects worry their locals is seen as the primary reason for the company not patrons in two ways. They represent direct inefficiencies realising its planting targets. In the village of Empurang but they also have an indirect impact, eroding the popular and in Jangkang district, in Sanggau, instances of support for the projects at all levels, from local to coercive land negotiations, unfair labour practices, international. Creation of a bad image threatens their broken promises, harassment and intimidation of continuation in the future. villagers by company staff and military and civil officers have been documented (Bamba 1996; Mayer 1996a). HTIs: revised approaches In Empurang in 1992 the failure of Inhutani III to keep In response to mismanagement and problems associated a promise to build villagers a road, the commencement with the classical HTI approach two types of revised of work without consultation, intimidation by soldiers, approach to HTI development have emerged in West and the felling of trees and high quality forest reportedly Kalimantan. Most conspicuous is the ‘integrated HTI generated resentment that eventually led villagers to burn system’ announced by Finnantara Intiga for use on its down the company’s base camp and plantation (Bamba 300 000 ha concession stretching across northern 1996: 22-4). Rather than negotiate fairly, Inhutani III Sanggau and Sintang. In a plan announced in mid-1994, has been inclined to buy the support of village heads Finnantara Intiga proposed to take over the management and petty officials and then use their authority to coerce of much of Inhutani III’s concession in Sanggau and other villagers into participation. When villagers refuse get it back on track (Mayer 1996a: 193). Finnantara’s they are branded obstructers of development, told they plans were to plant 100 000 ha with Acacia mangium, are occupying their traditional lands illegally, refused A. crassicarpa and Eucalyptus pellita over eight years employment on the project and further harassed by from 1996/97 to 2003/4 (PT Finnantara Intiga no date). military and intelligence officers (Mayer 1996a: 198). This would supply 500 000 tons of raw material for a pulp mill to be built in the future, presumably when the Problems with the type of approach used by Inhutani III plantation was well established. compound general problems that afflict HTI projects. A major concern has been that companies merely seek More significant are the environmental and social HTI concessions so they can gain permission to cut and elements of the programme, intended to attract local sell the existing timber on the land (WALHI and YLBHI people and improve the image of HTI at all levels. 1992: 29; Hasanuddin 1996: 14). These companies often Finnantara has made a commitment not to log natural do not intend to reforest. They access valuable tree forest and only revegetate truly degraded lands, willingly stands by contracting consultants to make fraudulent relinquished by villagers. They also intend to minimise assessments understating timber quality. The funds they the use of chemical pesticides and herbicides and instead receive for reforestation, it is asserted, they divert to rely more heavily on manual labour. The core of their higher-yielding investments (Mayer 1996a: 156). It is approach is the package of benefits offered to villagers common in Indonesia for new plantations to be willing to participate. Villagers giving land to the project established at the expense of the natural, closed forest will retain control over 25% of that land, developed at (Dudley et al. 1995: 9). Misuse of the reforestation fund the company’s expense. Five per cent will be planted Lesley Potter and Justin Lee 17

Photo 1. PT Finnantara Intiga's Acacia mangium plantation Photo 2. Closely spaced rubberwood plantation, owned in Sintang, West Kalimantan. The plantation is established by PT Lahan Cakrawala, Sintang, West Kalimantan around copses of trees valued by smallholders

with improved rubber, 10% with multipurpose trees (to private investors (fieldwork, Lee, September 1997 and meet subsistence needs and boost biodiversity) and 10% Lim personal communication). of the pulp trees will be for the villagers’ benefit. They are also compensated for land leased by the project, The core labour force for establishment and maintenance promised infrastructural developments and given of the estate comes from 150 transmigration families assistance to set up credit and loans organisations and located at the site. These transmigrants, together with to intensify their agriculture, through tumpangsari4 another 150 local families (the traditional landowners), activity and the development of wet rice (PT Finnantara have been given a house, a food crop garden and access Intiga no date). Finnantara is thus trying to buy to a diverse fruit tree garden. They do not receive involvement with a generous package rather than rely ownership rights over estate trees and hence most of on coercion. Extension is to be wide ranging and their income will come from labouring on the estate. villagers are not to be pressured but left to join when Depending on the job performed they can earn up to they want. It is acknowledged that this approach will 3500 rupiah per day. The company is sensitive to the be more time-consuming. feelings of traditional landowners and will not disturb grave sites or established tembawang. Villagers will be Another alternative to the classical approach is the given training on how to tap the clone rubber trees in a growing of rubber trees for both rubberwood and latex manner that will not reduce their value as rubberwood. by HTI companies in conjunction with transmigration. At present only one HTI company is undertaking such Initial reports suggest many villagers are positive diversification in West Kalimantan, PT Lahan towards these revised HTI programmes. Finnantara Cakrawala, on an 8000 ha site in south Sintang. Lahan Intiga’s package has attracted interest from many Cakrawala is a subsidiary of Inhutani III and the logging villagers, especially in Sintang regency, including company PT Esra Djuliawati. The site is a former villages falling outside the concession. Where logging concession exploited by Esra. The company Finnantara has commenced work there are no stories of commenced planting improved rubber clones in 1992 villager dissatisfaction or resentment as in the past. and the trees will soon be ready for tapping. Latex will Similarly, there have been no public expressions of be processed at a crumb rubber plant built at the site. dissatisfaction from villagers involved with Lahan After 15 to 30 years the company will commence Cakrawala. The Malaysian consultants assert that they harvesting rubberwood which will be processed in too have been approached by villagers outside the Sanggau and then exported, primarily to Europe. It is a concession area asking for employment and for a similar high-input, intensively managed system, especially for project in their villages (Lim personal communication). the first two years, requiring extensive use of fertiliser, herbicides and cover crops. The estate is managed by Nevertheless, despite the considerable effort put into Malaysian consultants and is financed by the designing these revised approaches, and positive reforestation fund, the transmigration programme and reactions so far, there are doubts surrounding their future 18 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions viability. Lahan Cakrawala’s approach does not pretend Photo 3. Acacia mangium eaten by grubs on PT Finnantara to be as environmentally and socially sensitive as that Intiga plantation, Sintang. of Finnantara Intiga. It is more unashamedly a commercial enterprise. While it is perhaps more likely to be commercially successful, it also runs a greater risk of alienating villagers in the future. Project organisers indicate that to date they have had to recruit (very willing) labour from surrounding villages because of the demands of estate establishment. After establishment, however, there will be significantly less labour needed (Lim, personal communication). How villagers react to this will be important, particularly for the 300 families relying on estate employment for their livelihood. Availability of job opportunities will also depend on which product the estate intends to give priority. Villagers seem to view a rubberwood estate more favourably than a pulp or timber plantation because of the opportunity to work tapping the trees before they are ready for felling. For the company to get a high price for their rubberwood trees, however, the trees must not be damaged by poor harvesting techniques. This is a real risk if they are tapped by an unskilled labour force. While Lahan Cakrawala is training villagers in proper tapping techniques, it is not known how much tapping they will in fact allow on their valuable asset. Furthermore, the rubberwood trees are planted at 2 metre by 3 metre spacings so that they will be straight; whether they will be suited to latex production at such density is also debatable. concession). Local people communicate across village boundaries and share information about what they can Even greater uncertainty surrounds the future of get from the company. They are experienced at waiting Finnantara Intiga’s project. Finnantara has given priority to strengthen their position, as with the withholding of to developing a package that will appeal to villagers. rubber when prices are low (R. Utama personal Such compromise, however, comes at a price. In communication). When villagers eventually do offer signalling to local people that it will bargain, the land they again seek to maximise their personal company could encourage villagers to push the limits advantage. They surrender small areas of their worst of its goodwill in directions it cannot afford. It must land to get the benefits of the project, but retain the perform a careful balancing act as concessions to traditional bases of their livelihood. This is problematic villagers minimise the profits received by other for the company which loses economies of scale by stakeholders. The company is now facing the real risk having a plantation segmented into numerous small, of losing the support of its commercial and business dispersed units (often only about 100-200 ha per partners and government decision makers. As argued village).5 In more isolated, less commercially astute by Mayer (1996b), the imperatives of a modern villages, Finnantara also risks entrenching an existing commercial pulp company may simply be irreconcilable dependency culture. Today’s baubles could become a with the environmental and social concessions proposed snowballing burden that the company is eventually by Finnantara. unable to meet, leading to villager disappointment capable of derailing the project. Finnantara is effectively trying to buy the use of villagers’ land and hire their labour, by fair means rather There is already evidence that in trying to meet villagers’ than foul, for their business enterprise. In such demands the project is losing attraction for other circumstances it is only rational that villagers should stakeholders who are crucial to its continuation. There try to maximise the price received. The relinquishment is a widely held perception that Finnantara’s project is of land has not been rapid; villagers use their option to ‘..very, very, super high cost’ (Haryono personal carefully consider the company’s offer and then try to communication). These costs, the slowness of land get a better deal (Finnantara estimates that they may relinquishment and the continued reluctance of anybody only establish 50 000 ha of plantation in their present to build a pulp mill is giving Finnantara’s Indonesian Lesley Potter and Justin Lee 19 stakeholders cold feet. Finland’s Enso, which is communication). Upon receiving their concession they controlling the company’s day-to-day operation and do not intend to set up an estate but instead try and sell driving the integrated HTI approach, is persevering but their right to genuine developers. They can try to trade its Indonesian partners are having second thoughts. the land for two years before their lack of activity on Neither Inhutani III nor Gudang Garam are said to have the site means it must be returned to the government for made their contributions (received from the reforestation reallocation. Government protection over Finnantara’s fund) to the project’s costs, even though work is well existing concession has also been revoked. In various under way. Enso is carrying the entire burden (Adjers sites in both Sanggau and Sintang, oil palm companies personal communication). It is speculated that the are approaching villagers living within Finnantara’s Indonesian partners, more familiar with outright concession and signing them up to take part in nucleus exploitation of resources and people, may be directing estate projects. In two locations they have already capital received from the reforestation fund into commenced land clearing. Finnantara’s renewed appeals investments attracting quicker profits. Inhutani III’s lack for protection have fallen on deaf ears. Map 2.2 shows of commitment to the approach is particularly worrying. the formal area of overlap between oil palm and HTI To the confusion of the project’s Finnish consultants, concessions, including that of Finnantara. Informally, Inhutani III is setting up a new HTI plantation using the even more of their concession is under siege. classical approach on a concession bordering that of Finnantara Intiga (Adjers personal communication). Finnantara Intiga has been punished for being This is at a time when Finnantara is seeking to expand concessionary to local people. It has disenfranchised its concession because the land granted to it at present its business partners and government decision makers. is either still forested or farmers wish to retain it for This threatens to dry up its supply of capital and, more private uses. importantly, land. The reformed HTI approach has failed to regain the support and faith of policy makers; instead Finnantara is also losing the crucial support of the there is a new golden child, oil palm. While this estate regional government. When it commenced its project crop is not new, oil palm investment is now booming in the company received the Governor’s approval to cancel West Kalimantan, consistent with national and existing oil palm, rubber and logging concessions international trends. The problems with Finnantara’s overlapping its concession area. It now seems the approach together with the emergence of oil palm could company has fallen out of favour. Government officials signal the end for large-scale pulp plantations. Pulp in Sanggau expressed frustration at the slowness of production may also be exiled to the periphery of Finnantara’s progress and its unwillingness to utilise land provincial development. In an act perhaps revealing in its concession which was still under tree cover. They desperation, Finnantara is said to be discussing with the believe this land is underutilised and argue that if adjacent Social Forestry Development Project (SFDP) Finnantara is not going to use it they will make it the possibility of its villagers growing pulp trees for the available to other developers (Setiman personal company. communication). In many ways Finnantara is suffering for the moral code it has adopted. Indonesian staff of Oil palm estates the company say they are also losing support because Oil palm has emerged as the dominant tree crop for the Finnish organisers refuse to sanction the payment planting on estates in West Kalimantan. Rubber trees, of informal fees to government officials, as is the wont most planted by smallholders, covered an area of 444 of competing ethnic Chinese businessmen. The 426 ha in 1995. Oil palm was the next most extensive company’s commitment to using less chemicals also tree crop on 183 082 ha (Pemda Tk I Kalbar 1997).6 finds it desperately seeking a suitable local species for The estates were usually a combination of nucleus (pure pulp as its stands of Acacia mangium are ravaged by plantation) and plasma (smallholder) sections. The latter pests. always exist as part of the wider organisation and have access to the company’s factory, as palm fruit must be For Finnantara the consequences of losing government processed within 24 hours when harvested. support are already biting deep. The company cannot Approximately 175 private businesses have now been get the extra land it needs to develop its plantation in granted permission to set up oil palm estates but only the sensitive manner desired. The situation is worsened 56 of these have actually commenced planting and land by the ‘land grab’ currently gripping all of West clearing (Mangan personal communication). While a Kalimantan and land speculators who are exacerbating number of these businesses may be land speculators the the land shortage. Speculators are submitting bogus land likelihood that many are bona fide means the area of oil development proposals, usually mythical oil palm palm estates will increase dramatically in the near future. estates, to win concessions over large areas (Adjers The provincial government has set a target of 500 000 personal communication; Mangan personal ha by 2003 (Suara Pembaruan 25/2/98). The area of 20 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions land under oil palm and rubber estate concessions is also ‘kemitraan’ relationship (partnership) with local people shown in Map 2.2. within their concession. The estate must provide them with benefits. Most companies still choose to establish Oil palm estates were initiated in West Kalimantan by both nucleus and farmer-owned plasma estates but the the state-owned enterprises, PTPs (Perseroan Terbatas package offered to local people is not as comprehensive. Perkebunan). Their activities were centred around For example, under traditional PIR schemes Ngabang in Pontianak regency and Parindu in Sanggau smallholders participating in the project would have their regency. PTPs had established 71 771 ha of oil palm living costs met for one year by the company. throughout the province by 1995 (BPS 1996a: 189). Concessions of this type have been abolished in modern Sixty-six per cent of this area is not yet productive. Trees schemes. This change is still very recent, however, and which have reached maturity are producing just over most existing companies have commenced and are four tons of CPO per hectare per annum, or about 100 committed to continuing PIR schemes. 000 tons in total (BPS 1996a: 189, 216). Reform of the PTPs in recent times has placed all state-run oil palm Oil palm estates: crucial support of regional estates under the control of one company, PTP XIII (PT government Perkebunan Nusantara XIII). Consistent with the The role of government in facilitating the rapid government’s preference for private companies to take expansion of oil palm estates cannot be underestimated. over oil palm development, new concessions are no Access to land determines the success of all tree planting longer given to the PTPs. There will still be further developments. As mentioned with reference to industrial expansion of PTP XIII’s oil palm estate, however, as it timber and pulp plantations, government agencies with plants the extensive areas of land still undeveloped in the capacity to grant this access now favour oil palm its existing concessions. estates.

Private investors and companies are now the primary In theory, central government sanctions may be applied force driving oil palm growth. In centrally located, not to control the operations of oil palm companies, if these too remote regencies such as Sanggau and Ketapang are seen to be detrimental to the national interest. Land there is a rush by companies to set up oil palm estates. clearing practices of such companies incurred the Reportedly there is a land shortage, meaning not all greatest criticism from the Ministers of Forestry and proposals can be accommodated. Companies have also Environment during the smoke/haze disaster of mid-late turned to the regencies of Sintang and Kapuas Hulu, 1997. Many oil palm companies had their land clearing which until now have been considered relatively remote. permissions (IPKs) revoked, 29 in West Kalimantan Many of the private companies setting up in oil palm alone (Akcaya 16/9/97, 4/10/97), although these were appear to be subsidiaries of larger conglomerates with subsequently restored. The Forestry Ministry (now diverse interests, including logging. At the national level somewhat ominously named the Ministry of Forestry two of the primary pulp and paper producing and Estates) should also be able to seriously arrest the conglomerates, Raja Garuda Mas and Sinar Mas, also spread of oil palm companies by limiting access to land. have vast oil palm interests (Sonnenfeld 1996). The It is that Ministry which gives the final permission for prospect of quick profits and the relatively limited forest lands, the greatest reserve of land in Indonesia, to establishment capital needed appears conducive to be converted to agricultural use. However, the Forestry attracting companies with these backgrounds. Five and Environment Ministries, despite their high profiles, Malaysian enterprises have also signed agreements for have limited projection into the provinces and cannot joint ventures with private Indonesian companies to set enforce their will. The support of influential agencies up plantations and processing facilities in West in the regional government is more important and that Kalimantan.7 is where oil palm estate managements concentrate their energies. PTP estates have consistently been established around PIR/NES schemes (Perkebunan Inti Rakyat or Nucleus At the provincial and regional levels, oil palm Estate and Smallholder scheme). Private companies in development is strongly favoured by the offices of the the past usually set up PIR Trans schemes including Governor, the Bupatis (regents) and the Regional transmigrants. West Kalimantan had more companies Development Planning Board (BAPPEDA, Badan involved in the PIR Trans programme than any other Perencanaan Pembangunan Daerah). These agencies province and planted the largest area of land under this have the power to grant land and ease passage for the programme (ICBS 1997: 112). It is no longer developments of their choice through the complicated government policy to compel private companies to set regulatory processes. They prefer oil palm because they up PIR estates, but companies must still build a perceive that commodity as helping them to quickly Lesley Potter and Justin Lee 21 achieve their vision of provincial development, which Oil palm estates: impact has at its core economic growth (Muis Ishak personal The further rapid expansion of oil palm estates in West communication; Setiman personal communication; Kalimantan is an inevitability. Expansion can already Pemda Tk I Kalbar 1997). It is estimated that oil palm be witnessed on the ground, market demand remains estates are most likely to attract private investment, good and wealthy investors and companies continue to generate local employment and export income and show strong interest. State companies (PTPs) will stimulate the creation of downstream industries within continue to expand the planted area of their existing the region. There are already six CPO (crude palm oil) concessions but their activities are being overshadowed processing plants in Sanggau alone and it is hoped that by the newly emerging private companies. Given this a margarine factory will eventually be built. It was certainty it is crucial to assess the impacts of oil palm promised in 1997 that new oil palm plantations in estates on local people from current evidence. Sanggau would receive a road link to the existing highway system, no matter where they were located in PTP oil palm estates were the first in West Kalimantan, the regency. The most important assistance, however, set up in 1982 with funding from the Indonesian has been access to land. Regional government officials government and the World Bank. They placed greater are facilitating the rapid expansion of oil palm emphasis on villager development than commercial plantations by fast-tracking the acceptance of proposals profitability. Participating Dayak smallholders and by making production forest land available. After relinquished 5 ha of land to the company. The concessions have been granted they also help the company’s nucleus estate occupied 2.5 ha of this land companies convince local people to surrender land and while the other 2.5 ha was returned to the farmer, take part in project activities. complete with a house, house garden and land already planted with oil palm trees. Villagers had to pay back For production forest lands to be converted to to the company the costs of establishing their estates, agricultural uses, a request must be put to the Governor’s plus interest at 6% per annum. They commenced making office which in turn seeks permission from the Forestry payments when their trees started to become productive Minister. The Governor’s office routinely undertakes at 3 to 4 years of age. As villagers were contracted to this task every five years when it draws up the provincial sell all their fruit to a company factory built at the site, land use plan (RTRWP, Rencana Umum Tata Ruang a payment towards this debt was automatically deducted Wilayah Propinsi). The Forestry Minister’s decision is every time fruit was received (normally 30% of its based, amongst other considerations, on the quantity of value). When the debt was paid off villagers received a commercially exploitable timber on the production forest certificate from the lands titles office (BPN, Badan land. When that is estimated by an approved consultant Pertanahan Nasional) verifying that they owned the to be less than 16 cu m/ha, conversion is normally agreed plasma estate. During the establishment phase villagers to and the Forestry Department’s map of forest land use were paid for labouring on the estate and they received is amended accordingly. In reality, however, the a living allowance for one year. The company also regional government grants oil palm companies access to production forest lands regardless of the Forestry provided them with extension and materials (on credit) Minister’s decision. Companies are normally allowed and established schools, health centres, roads and to commence land clearing before the Forestry research facilities. Not all villagers followed the Minister’s approval is given and that approval is easily programme and even those who did continued to farm and often manipulated by deliberately misleading rice swiddens and tap jungle rubber gardens. Mudiyono assessments of the quality of the forest vegetation by et al. (1992) estimated that farmers kept, on average, consultants interested in receiving further work from 50% of their land for traditional agriculture. companies. Even when the Forestry Minister refuses to allow conversion, land clearing often continues The PIR Trans schemes, set up by private companies regardless. The Forestry Ministry has limited presence with support and funding from the transmigration in these regions where the power of Governors and programme, work along similar lines. Commencing in Bupatis dominates. The latter give priority to economic the late 1980s, these schemes required participating growth and may consider social issues but rarely share Dayak landholders to relinquish 7.5 ha of land to the the Ministry’s environmental concerns. There is also company. The nucleus estate again occupies 2.5 ha, the little doubt that oil palm companies, backed by wealthy villager surrendering the land has a 2.5 ha plot investors with considerable personal influence, have the established on credit and the remaining 2.5 ha is given capacity to cultivate favour with local officials. Map to a transmigrant family complete with estate and house. 2.3 shows how present forest land use classifications Dayak households are offered the same package as that differ from those recorded in the RePPProt series of given to transmigrants but often do not take up the option 1987; it is an indication of the extent to which production of having a house built on their behalf at the plasma forest land has recently been reclassified. estate, preferring instead to remain in their traditional 22 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

Map 2.3. Sangau and Sintang change in forest land use classification, 1987-1996

Source: From BPN West Kalimantan provincial office 1996 and RePProt 1987. Lesley Potter and Justin Lee 23 kampungs. Households may surrender twice as much The economic benefits of oil palm estates are supposed land and receive two plasma plots and they do not have to be their strong point but estate organisers, villagers to join up immediately. They may wait until the project and independent observers are divided over their is well under way on the land of their neighbours before performance on this criterion. From the perspective of becoming involved. Like the PTP schemes farmers must the organising companies it might be presumed the pay back the establishment cost of the plasma estate estates were economically advantageous. Product before receiving a certificate over the land and they must demand and price have remained high on national and sell fruit only to the company. Villagers can again be international markets and, at least to the end of 1997, employed on the nucleus estate but there is no money new investors were queuing to set up operations. There for living costs nor the construction of public facilities has been some concern that continued establishment of for the benefit of the traditional landowners. new estates could lead to an oversupply and eventual price decline. While there is no sign of this at present, Private companies commencing projects today are self- such a perception could reduce the quality of estates funding. They do not receive funds from international now constructed, encouraging them to be more donor agencies, the transmigration programme or any exploitative of resources and less interested in long-term other government source. The government’s PIR KKPA regional development. scheme (Kredit Koperasi Primer Anggota) is intended to help companies setting up PIR schemes to access bank The organisers of the PTPs feel more immediate concern. credit, but few companies see the need for this assistance. PTP Nusantara XIII is struggling to compete Only one company in West Kalimantan (in Ketapang) economically with the plethora of private companies now is making use of the scheme and that is purportedly in operation (Sipayung personal communication). because it can draw funds from a sister company, the Compared to modern estates they have a smaller Bank Bumi Daya (Mangan personal communication). company nucleus in relation to the smallholder Being financially independent, companies are now free component, making them more reliant on farmer from the commitment to use the nucleus estate model. production. Unfortunately, farmer management has not As the entrance of these companies is still very new been as intensive or high yielding as they would like, reducing their supply of raw material and income. Their (most expansion is by companies awarded their trees appear to be declining in yield prematurely8 and concessions some time ago, using the old schemes) it they are struggling to stay afloat. The World Bank remains to be seen exactly what model they will develop. (1992) observed that PTP oil palm and rubber estates Early indications are that they will adhere to a basic generally have serious economic problems. They are PIR scheme, inviting villagers to surrender 7.5 ha of burdened by excessive debt service obligations and at land as for PIR Trans but then take 5 ha for a nucleus the time of the Bank’s report over-ran their costs by an estate and still give only 2.5 ha back to villagers for average of 42%. Production costs on PTP estates were plasma. There is doubt whether villagers will be given estimated to be 15% higher on average than private other benefits. Other companies are expected to develop estates. To overcome these problems the World Bank entirely company-owned estates with no plasma recommended that PTPs should be freed from the component (made possible by converting forest land responsibility of smallholder development. with no previous claimants). These schemes will only involve local people as labourers. The government has There is even more division over the economic benefits emphasised that all estates must establish a ‘partnership’ of oil palm estates to individual households, particularly (kemitraan) relationship with locals, but this is a broad, Dayak households whose traditional livelihood systems unenforceable concept which does not specify standards have been disrupted by the estates’ arrival. A study by that must be followed by companies. Mudiyono et al. (1992) of the impacts of PTP estates around Parindu and Ngabang concluded that, despite a The impacts of these three different models will vary number of social problems associated with the change greatly. It is generally thought that local people were from a traditional to a purely commercial orientation, better off under the earlier schemes, with recent ones overall Ribun Dayaks who participated in the inclined to be more exploitative. It is too early, however, programme were better off economically. Mudiyono et to assess fully the impacts of schemes introduced al. based this assessment on their belief that the existing recently. An accurate picture can only be obtained for shifting cultivation system was unsustainable, generated PTP and PIR Trans schemes. The following discussion less income and led local people into remote locations details general impacts from these two established in search of land (which added to their commuting time approaches, identifies specific differences between and disadvantaged children’s education). They asserted different types of estates and refers to the likely effects that under the traditional system farmers worked in their of the most recent private schemes. swidden fields for nine months of the year and then spent 24 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions the other three tapping rubber, where they earned an described above. In PTP villages in Parindu farmers income of between 60 000 and 90 000 rupiah per month. said that they used to earn between 500 000 and 800 In comparison they observed that in 1991, farmers 000 rupiah per month but now only received a maximum working plasma estates earned between 100 000 and of 300 000 rupiah per month. This was supported by 180 000 rupiah per month throughout the year. A less smallholders in two MPE villages who said that families comprehensive study by Bunyamin et al. (1990) could make 300 000 rupiah per month if all went well, interviewed 100 villagers working plasma estates in five but sometimes received as little as 150 000 rupiah. locations and found that the vast majority earned up to Villagers working PTP plasma said this decline came 200 000 rupiah per month in 1990. This was about because their trees were producing less fruit. Even substantially more than they had earned in their previous though they were only about 15 years old and supposedly occupations as rubber tappers, company workers and at their peak (they remain productive until 30 years in farmers, and more than those living in the same villages theory), the trees were much less fertile than at 6-8 years.9 who had not joined the scheme. Lower production in MPE villages may be a result of the trees being still immature (they were planted in 1989/ Indeed it is often asserted that the incomes earned from 90), or perhaps just slow to fruit. working a 2 ha plasma estate are substantial in relative terms and easily enough to support a family (Mangan Villagers also complained about the lack of work personal communication; Durr personal available for day labourers on the nucleus estate. This communication). An economist of the Sintang-based work is highly sought after and difficult to obtain. While oil palm company PT Sinar Dinamika Kapuas (SDK) there is normally much work in the establishment phase, estimated that farmers in 1997 could earn 700 000-800 it dries up when this is completed. Companies often 000 rupiah per month from a plasma estate with palms use Dayaks for land clearing, believing they are aged 6 years, and up to 1 million rupiah per month after experienced with this activity, but then substitute 13 years when the trees were at their peak (Fulbertus transmigrants for ongoing, day-to-day maintenance and Amre personal communication, supported by Mangan harvesting (Daliman personal communication). On PTP personal communication). The increased variety of XIII’s estate they employed transmigrants, originally employment opportunities for the land-poor was also brought to the area for a food crops project that collapsed, praised (Mudiyono et al. 1992). In 1997 labourers on believing them more reliable in attending and keeping SDK’s nucleus estate earned on average 4700 rupiah regular hours (Sipayung personal communication). per day. On the estate of the private company PT Multi Dayaks involved with the SDK project complained that Prima Entakai (MPE) they earned around 4000 rupiah when they did get work on the estate they received a per day and more for harvesting which depended on the maximum of about 15 days per month, restricting their speed of work (up to 7000 rupiah per day). There were income to 70 000 rupiah. They said the estate closed on also opportunities for villagers to labour on other Fridays and Saturdays, but Sunday was a work day. As farmers’ plasma estates. This paid better, either 10 000 Christians they wished to attend Church on Sunday and rupiah per day or at harvesting time about 30% of the so could only work on the estate for a maximum of four value of the harvest. days per week. In the village of Sungai Kunyit the Dayak residents did not believe that the MPE oil palm estate, Villagers qualified these economic benefits, however, which has consumed large amounts of land, employed and were less enthusiastic about the improvements they enough local people. There was a high rate of were supposed to have experienced. Villagers spoken unemployment, especially among young people to were careful not to be too critical of the schemes. In educated to senior high school level who did not wish PTP villages in the Parindu district, Dayak villagers to work as labourers. Job opportunities for school leavers repeatedly asserted that since the company arrived their on the estate were very few. The estate employed some living standards had improved and they had earned cash young men but most young women preferred to leave which helped educate their children. In SDK villages the village for Sanggau to work in the plywood factory the reaction was still complimentary but much more of PT Esra Djuliawati. Women do work on the nucleus reserved, with a Dayak village head saying that since estates but most of the higher-paid jobs, such as the company’s arrival in 1990 living standards in the harvesting, are more suited to males. village had ‘...rather increased’ (agak meningkat), a culturally disparaging use of the adjective. Villagers Smallholders were also concerned by the costs revealed, however, deep dissatisfaction with many associated with their plasma estates that ate into the aspects of estate management which reduced the profits received. They said the debt they owed to the economic benefit they received and bodes ill for the company for estate establishment was often much greater future. Foremost is that most plasma estate owners in and took longer to pay off than anticipated. It is normally 1997 were earning considerably less than the estimates predicted that debts should be paid off two years after Lesley Potter and Justin Lee 25

Photo 4. On PTP oil palm estates throughout Indonesia with a 2 ha plot on the PTP XIII estate had to buy seven ageing trees are becoming difficult to harvest and declining 50 kg sacks of fertiliser every six months at a cost in in productivity. 1997 of 25 000 rupiah per sack. (Immature trees had earlier used double that amount.) They were unhappy that they were forced to continue to make this payment regardless of the declining productivity of some of the trees.

Villagers participating in both the MPE and PTP XIII estates argued that the price they received for their fruit had changed little since establishment and had been more likely to drop than increase. PTP XIII villagers said the company gave them just 180-196 rupiah per kilogram of fresh fruit, a low price that had not increased since establishment. They complained in September 1997 that the deflation of the rupiah and the drought had already raised rice prices at the local market by 100 rupiah per kilogram and increased the price of fertiliser. The price of their oil palm fruit had not risen correspondingly. They said the price of oil palm needed to be about 300- 350 rupiah per kilogram before they could make a decent living.10

Therefore, the experience of villagers is generally that while PTP and PIR Trans oil palm estates have provided the trees come into production. Most farmers in PTP them with cash income in the past, which allowed them villages have now completed payment of their debts but to modernise their living styles, they are now it took from three to seven years. In MPE and SDK increasingly dissatisfied with the economic returns and villages, whose projects both commenced around 1990, see the situation worsening in the future. They have many farmers have yet to close their debts. PTP villagers also been disadvantaged by the opportunity cost of these in Parindu incurred a final debt of between 4.5 and 6.5 oil palm developments which have consumed large areas million rupiah. Villagers participating in MPE’s of land which was previously their own to use as nucleus programme say they have incurred debts of up to 18 and transmigrant estates. This has reduced the million rupiah including interest payments. Such a debt alternative incomes available, for example from burden greatly reduces the incomes farmers earn from swiddens and non-timber forest products, and reduced their trees in the early years. This is of concern given the land available to their children. In response to the that this may well be their most productive age declining profitability of oil palm estates, however, (according to evidence from PTP XIII’s estate), perhaps villagers are already adopting a number of survival because of intensive management and high fertiliser use strategies. These are most evident around the long- during the establishment phase. Farmers also established PTP estates. complained that the private companies made deductions automatically, with no record of how much these An extreme reaction for some villagers in Ngabang and payments were and how much they still owed. They Parindu to the hardship caused by the oil palm estate is could not predict when the land would revert to their to abandon their homes, migrate to other districts where ownership; it was only when they had closed the debt they have family and establish a traditional livelihood that they could estimate accurately how much they had all over again (Daliman personal communication). paid. They were suspicious that this was a ploy to take Others have chosen a different strategy. They are more than was really owed. adapting their use of oil palm, refusing to develop it intensively but instead employing it as a supplementary Fertiliser is another cost. It is also part of their contract crop in a typically extensive semi-traditional livelihood that villagers must purchase fertiliser from the company, system. Villagers with PTP XIII’s plasma estate near the cost of which is again automatically deducted from Bodok in Parindu are using the fertiliser that they must money owed for their fruit. Fertiliser is crucial to the purchase from the company, not on their oil palm but growth and yield of the palm. All companies want to on permanent and semi-permanent paddy and dryland ensure farmers use fertiliser to maintain their supply of food crop gardens. Households commonly divert two raw material. When their trees were mature, farmers of the seven sacks received to food crops, which may 26 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions allow them to harvest 1-1.5 tons of rice per season. improvement. Farmers in Sungai Kunyit have formally Villagers are also spending more time working food crop protested to MPE management about low prices. In the gardens and establishing and tapping rubber trees. They past local villagers have cooperated with the company may spend as little as two days per week on their oil to stop transmigrants from selling their plots and palm plasma, essentially harvesting whatever fruit is allowing wealthy individuals to create private plasma growing but doing no other maintenance. This is a monopolies. In Tapang Semadak, villagers believe their rational response for villagers. With the price of oil problems getting work on the SDK estate could be palm static and that of rice increasing it makes sense to relieved by the development of other estates in devote more resources to food crop production. With surrounding villages and districts. This will reduce the the reduction in land area available because of the estate, number of outsiders coming to their community for work farmers cannot increase the size of their rice fields or and will provide them with more varied opportunities. look for new fertile land for swiddens. It is logical to Finally villagers may be happy to allow the establishment use the fertiliser forced on them by the company to of entirely private estates if they are also permitted to achieve yield increases. Moreover because the trees are set up their own, totally independent, small-scale oil prematurely yielding less fruit and because their great palm estates. Some smallholders are eager to do this height now makes them difficult to harvest, it is sensible but at present they cannot obtain credit and they need for farmers to divert their labour to food crop production. permission to set up small scale processing plants as There may also be a cultural motivation in this reaction; occur in Sumatra. Government officials do not support Dayak villagers feel more comfortable being masters of this concept saying it could lead to theft of oil palm their own destiny with an assortment of productive assets fruit (Mangan personal communication). In short, in their fields and baskets of rice in their homes. They villagers have ideas and are willing to compromise are uncomfortable with the commercial and market further so long as some action is taken. The future of dependency foisted upon them by the estates. Of course the current estate system will probably depend on the with reduced fertiliser use and maintenance the oil palm corporate culture of oil palm companies and their trees will become less productive, forcing the farmers willingness to negotiate fairly. to look for other sources of income. In this manner their reaction may be a self-fulfilling prophecy. Aside from economic impacts of oil palm projects there are also an array of sociopolitical and environmental This incorporation of oil palm trees into a semi- impacts. Economic impacts are most important because traditional mode of production may have important they are what villagers themselves seem to value most. consequences for the future management of oil palm From a villager perspective, so long as economic benefits estates in West Kalimantan. It is not in the interests of are tangible and immediate, sociopolitical and the company to have low-yielding plasma estates. They environmental upheaval may be tolerated to a degree. consume land within the company’s concession but do Probably the most severe sociopolitical impacts now not produce the maximum available return of raw being encountered arise from the methods by which new materials. Companies would not be expected to tolerate oil palm companies force their programmes on often this situation for long. Already PTP XIII is lobbying unwilling villagers. It seems that in the past these the government for permission to increase the size of its problems were not so severe. The stories of the nucleus estate in relation to plasma when it plants as yet promotion of older PTP oil palm estates do not compare undeveloped areas of its concession (Sipayung personal to those surrounding HTI programmes for example. communication). PTP XIII administrators say this is to Perhaps this was due to acceptance of the generous, achieve parity with new private estates but they also World Bank supported package on offer.12 A survey acknowledge that it is because they are concerned by conducted for the SFDP in 1991 said rubber and oil palm the lack of production from plasma estates. Therefore, estates were ‘...extremely attractive’ to farmers (Clauss the plasma estate model which has been perceived as 1991: 72). They were not worried by the debt incurred fair by villagers, officials and development specialists and thought they had enough land. They were most alike, risks being abandoned if it remains unproductive. interested in the labour opportunities offered by PIR oil As the alternative is probably a shift to 100% company- palm (Clauss 1991: 72). It must also be said that many owned estates, this is not in the interests of villagers do appear eager to accept the more recent new smallholders.11 style oil palm estates. Farmers in Sintang regency in particular are often welcoming. They are land rich, If companies respond to villager concerns about current struggle to manage large areas of Imperata grassland economic impacts, the basic model currently used may and already their young people leave their villages in still be retained. Villagers have advised company search of employment on estates in other districts. They organisers of their complaints and made suggestions for often give the impression of being keen for any Lesley Potter and Justin Lee 27 development (although opponents of oil palm estates Photo 5. Villagers returning home after harvesting oil say this eagerness only exists because villagers are palm from their plasma estate, Sanggau, West ignorant of the estates’ disadvantages [Bamba personal Kalimantan communication]). Despite these exceptions, however, the desire of oil palm companies to expand rapidly in land-scarce locations appears to have led to the reactivation of a system previously used to force villager acceptance of logging activities and HTI plantations.

It is said farmers are manipulated and coerced into participating in projects. They are given false expectations and made promises which are not kept. Civil and military officials and village leaders are bribed so that they will support the company’s cause and place pressure on villagers. This pressure is more likely, at least initially, to be careful psychological manipulation rather than confrontational intimidation and force. The company and its agents accuse reluctant villagers of being anti-development and disloyal to the nation. weeding to women while they work for wages Villagers have been accustomed to be passive recipients (Mudiyono et al. 1992: 74). and succumb to this type of coordinated pressure. They agree to take part in the projects, at least outwardly. The aged (over 50 years) tend to find the work on oil Villagers normally respond to any problems encountered palm estates too arduous. Those with their own plasma with open, peaceful communication, to be followed by estates and no children pay others to maintain their plots. They are inclined to tap rubber trees, their own and those passive resistance strategies if problems are not belonging to others. The youth help their parents on addressed. plasma estates but they are also likely to work for wages on the nucleus estate. Young males in particular like The other major social impact of all oil palm estates is this work. They are paid by the amount of fruit they the changing labour arrangements that they force upon harvest and so the strong and energetic can earn good participants. Villagers, depending on age and gender, wages. Young men say they prefer working on oil palm have had to take on new responsibilities with the estates rather than tapping rubber because they do not potential to affect their welfare and status in the have to rise so early in the mornings. Estate working community. There is no absolute consistency in the way hours are from 7 am to 2 pm. Young women are less villagers organise their labour to accommodate work on inclined to work on the nucleus estate. The majority of oil palm estates but of those estates visited there did the nucleus estate workforce is said to come from tend to be general trends. Dayak villagers normally form transmigrant families who do not have established rubber themselves into groups to work on each other’s plasma gardens or land for swiddens. Transmigrant women are estates on a rotating basis. Men and women from each also more likely to maintain their plasma estates household work together on their estates. Men tend to themselves, while their men leave the village in search do the heavy work, cutting the fruit from the palm and of better paid work. carrying bunches of fruit to the road, while women do lighter work, spraying, weeding, fertilising and The implications of these new work arrangements do collecting individual fruits that have fallen off the main not seem to be particularly disruptive for Dayak adults bunch. In Parindu, however, women do carry heavy owning plasma estates. As revealed above, they tend bunches of fruit on their backs in large woven baskets only to harvest oil palm trees and not spend inordinate from beneath the palm to the roadside collection point. amounts of time maintaining them. Women are Dayak adults rarely work on a regular basis on the maintaining swiddens single-handedly but they have nucleus estate for wages, especially if they have their been doing that traditionally. Young men have a more own plasma estate. They are more likely to spend spare reliable source of income which reportedly frees them time in traditional activities such as rubber tapping, from parental authority and can lead to social problems hunting and swidden farming. Women spend more time (Mudiyono et al. 1992). Young women and land-poor on swidden plots than men but this is not new. Since Dayaks may be more disadvantaged. Finding work on the arrival of logging companies, Dayak men have only the nucleus estates is difficult or too arduous and the helped with land clearing and harvesting on swidden estate’s presence makes it even more difficult for them sites, leaving the time-consuming tasks of planting and to obtain their own land. 28 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

Photo 6. Oil palm fruit ready for collection, Sanggau

The involvement of transmigrants in oil palm projects impacts but educated outsiders consider them extremely is a social impact in itself. The presence of transmigrants important. Justifiable, although little studied, concerns has led to social envy on the part of the local population. relate to the overuse of fertiliser and other chemicals There is dissatisfaction from locals who want work on and the consequent effects on water quality, the fact that the nucleus estate but cannot find it because they the estates are monocultures with low biodiversity and perceive transmigrants to be already occupying all the their supposedly detrimental effects on soils (Bamba positions. At the time of establishment there were also personal communication; D.Rantan personal protests that a greater number of transmigrant families communication; MacKinnon et al. 1996: 558-60). received housing and development assistance than Estates also increase water flow in the wet season and Dayak families. Eventually, to placate the locals, it was reduce it during the dry season in contrast to natural decided that for every transmigrant family that received forest (MacKinnon et al. 1996: 644). Reducing the the package one Dayak family should also be amount of land available to smallholders, particularly if accommodated. At this time there were also strong the estates are not productive, also forces them to place protests when Dayak villagers and transmigrants were greater pressure on lands outside the estate. With the administratively placed in the same village units, removal of their natural forest, villagers in Sungai Kunyit sometimes with a transmigrant village head. This had turned to cutting down tengkawang trees from their problem has also been addressed but despite such efforts fruit tree gardens to obtain timber for house construction. residual resentment is still sensed. Of course, oil palm estates are more likely to be perceived to have detrimental environmental impacts Such resentment sometimes boils over into open conflict, when they replace natural forest. If they are established as occurred between Dayaks and Madurese in early on genuinely degraded lands they can be portrayed to 1997. While the initial source of the problem was far have environmental benefits (see Adiwiganda et al. 1996 from the areas under discussion here, it became of urgent and further discussion of their argument in Chapter 3). importance when Madurese blockaded the main road between Sanggau and Pontianak and killed some Dayaks Oil palm estates: conclusion travelling along that road. Dayaks from the entire Oil palm plantations are the most popular estate-based Kapuas basin became involved, killing Madurese tree planting activity in West Kalimantan. They have indiscriminately and insisting they should leave the achieved widespread distribution because they are province (Parry 1998). In this particular conflict, favoured by private investors and the regional Javanese transmigrants, the vast majority, were not government, two interest groups with considerable molested. As a group the Javanese are not considered influence in determining real land use. By using the pugnacious and they usually maintain reasonable PIR model these estates have also been accepted by relationships with the Dayaks. Cultural and religious Dayak smallholders who, as a group, continue to own differences are nevertheless considerable and there is considerable amounts of non-forest land. Private always the possibility for conflict to occur. investors and the regional government now want to expand oil palm estates further so they can achieve their Environmental impacts are the final concern with oil respective objectives. They have already allocated much palm estates. Villagers are not preoccupied by such of the province’s land area to oil palm companies. Lesley Potter and Justin Lee 29

The challenge in the future will be maintaining Dayak the HTIs secure land from villagers and the disputes support for these schemes, which will not be easy. likely to arise from the ‘classical’ approach to this Companies have revealed an intention to establish question, as exemplified by the State Forestry Company lower-cost estates with less direct assistance to local Inhutani. Finnantara Intiga, on the other hand, is people. This is at a time when existing oil palm attempting a more integrated approach that provides real developments are not providing the economic benefits benefits to participating farmers. Such an approach is to Dayak groups that were expected and when many slow and expensive so that the company now finds itself Dayaks are showing declining interest in the schemes rejected by most stakeholders and is losing out in the with their market dependency and company monopoly. competition for land with oil palm interests. There are many issues associated with oil palm developments that need to be resolved before they are The second half of the chapter is devoted to the expanded further. Of prime importance is their burgeoning oil palm estates, exploring chronologically economic sustainability for villagers who have the various types of estate/smallholder combinations that surrendered large areas of land and considerable have developed and the reaction of farmers to their autonomy for the supposed benefits offered by the perceived opportunities and constraints. It is argued that estates. Their yields, however, are already declining. oil palm estates do not have the ability to provide This bodes ill for the future because no mechanism has sustainable livelihoods for smallholders, and will likely been set in place for plasma estate rehabilitation. seek to minimise their future involvement, thus Farmers cannot afford to rehabilitate their own gardens. completing the dispossession of Dayak farmers. It is There is a real chance that they will have to sacrifice argued that far too much land has been and is being further autonomy merely to keep their gardens devoted to this commodity, which is threatening to operating. replace large areas of both production forest and smallholder agriculture. Oil palm has been strongly Companies must be responsive to these issues. They supported by both regional authorities and large cartels must encourage dialogue and practise fair negotiation. but their exclusive preference for this one commodity Failure to do so could result in the type of reactions is causing the overall development of West Kalimantan which until now have more commonly confronted to become unbalanced. industrial timber and pulp plantations. Unfortunately, oil palm companies are showing less sensitivity towards Endnotes local people than they have done in the past and have a greater inclination to rely on a forceful and intimidatory 1 approach. While the government has called for Tembawang are highly diverse and many-layered partnership relationships between companies and gardens occupying old Dayak longhouse sites in the smallholders, this is an ill-defined concept that is Kapuas basin of West Kalimantan. They usually contain currently unenforceable. fruit and tengkawang trees (Shorea sp.) yielding an alternative to cocoa butter. Similar indigenous Summary multicrop gardens, known by other names, are found in many locations across Indonesia. In this chapter we have discussed two basic types of 2 The position of rubber smallholders was not explored tree planting schemes: those attempting to work with in the field: see comments on the corresponding scheme Dayak agricultural systems, making them more in Jambi (Chapter 3). productive; and those that are displacing Dayak 3 This normally gives the company a right to use the agriculture. Neither government schemes, which have land for 45 years. Many villagers, however, consider concentrated on intensifying smallholder rubber, nor a that the company has bought the land and do not expect variety of experiments funded by NGOs and outside to regain its use. organisations, have so far succeeded in providing 4 Tumpangsari is a system whereby local people are sustainable and attractive alternatives to existing permitted to combine the planting of estate trees with systems. While some of the experiments are still in their own short-term food crops. It resembles the their early stages, they might soon find they no longer taungya system of Burma. have land on which to operate. 5 This problem is encountered also in the Hutan rakyat More important are tree planting schemes already schemes being implemented in Jambi. displacing Dayak agriculture, which include industrial 6 The latest available statistics from the Directorate timber and pulp plantations (HTIs) and oil palm estates. General of Estates (1996: 7) suggested that there were Considerable detail is provided of the ways in which 211 405 ha of oil palm in West Kalimantan in 1996. 30 CIFOR Occasional Paper No.18: Tree Planting in Indonesia: Trends, Impacts and Directions

7 Pahang Estate Development Corp with PT Bakrie & estates in West Kalimantan is 1,818 kg/ha/yr. ICBS Brothers; Austral Enterprise with PT Ponti Makmur (1997) suggests that 230 kg of CPO is produced from Sejahtera; Lam Soon Bhd with PT Bakrie & Brothers; 1000 kg of fresh fruit. This means West Kalimantan Golden Hope Overseas Plantation Sdn Bhd with smallholders produce, on average, 15 808 kg of fresh companies of the Benua Indah Group; and Suka fruit per year on a 2 ha plot, which would be worth about Chemical Bhd with PT Kalimantan Oleo Industry (ICBS Rp 3 million per year or Rp 250 000 per month. 11 1997: 88). The World Bank’s 1992 recommendation that PTP 8 PTP XIII’s Parindu estate is producing at only 60% of estates should be allowed to operate as purely commercial enterprises and not have to be responsible its capacity and its Ngabang operations at 30% for smallholder development can be seen as a reaction (Sipayung personal communication). to this productivity decline and an influential source of 9 Hoshour (1997) also reported that on transmigrant oil support for the changes requested by the companies. As palm estates in Riau, Sumatra, oil palm trees became a response to the current economic crisis, the government non-productive after 12 to 15 years. has announced that some PTP estates will be privatised 10 If smallholders receive only about Rp 190/kg for their (Jakarta Post 16/4/98). fresh fruit it verifies that their likely gross income is 12 Although at the time villagers did raise material only about Rp 250 000 per month from their 2 ha plots. concerns with the company regarding compensation for Figures from the Directorate General of Estates (1996: land, the contractual nature of the work, the size of wages 35) show the average yield of CPO from smallholder and the quality of housing (see Dove 1986).